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What are examples of securities fraud?

On Behalf of | Mar 13, 2020 | White Collar Criminal Defense

There are many different types of investment opportunities that exist nowadays. There are your standard stocks and bonds and then there more nuanced investments such as the digital currency known as bitcoin. The responsibility falls on the party offering the investment opportunity to be forthright in disclosing what the value of its shares is. It’s the responsibility of your portfolio manager to share that accurate information with you. Either party may be charged with securities fraud if the information that they give is inaccurate.

One common type of securities fraud that many individuals have heard of is insider trading. It involves one party with access to a company’s confidential financial affairs tipping a stockholder off to buy or sell a stock. It’s the responsibility of a company owner to first let their board know of any potential financial problems before they tell any individual investors. If they fail to do this, then they may be charged with insider trading.

Another instance that may fit the definition of securities fraud is if a corporation’s directors or officer fails to disclose accurate financial data to shareholders. If this happens and causes investors to sell off a share of a fledgling company, then they too may have engaged in securities fraud.

Any party that purposely circulates false information about the benefits of purchasing a cheap stock as a way to sell shares quickly at a higher price then dumps them for a profit may have engaged in securities fraud as well.

Portfolio managers who mislead their clients into making certain investment choices that may put their fortune at risk may also be charged with securities fraud for breaching their fiduciary duty to them.

If there’s one thing that you should know about the federal government, it’s that they’ll go to great lengths to investigate and prosecute financial crimes cases as serious as securities fraud. An attorney in Fayette can help you defend yourself against the evidence that they’ve compiled in your Kentucky case.