Securities Fraud

Securities Fraud Related Information:

The securities’ market of the United States has great potential for returns and also provides good opportunities for building wealth. This is the reason why securities are one of the leading types of investments for Americans who are looking to put their money to good use. The ever increasing investment in securities, and the large sums of money involved, has unfortunately led to the securities market becoming open to criminal activity, leading to securities fraud.

Securities Fraud Explained

In the past couple of decades, the securities market has seen an immense growth in trading of securities. This growth has encouraged a lot of fraudulent and unethical behavior on the part of brokers, shareholders, investment analysts, and other parties concerned with the securities market.

Securities fraud is any act, which is carried out by any person, with the purpose of influencing the securities market by knowing concealment, or calculated falsification of truth and important information. Deceit in the trading of any kind of securities, for the express purpose of individual profits, at the cost of other people, is known as securities fraud.

Different Types of Securities Fraud

• Broker Related Securities Fraud: Misinformation about securities, untrue statements, and error by omission, on the part of the broker can entice investors to trade in worthless securities. Such fraud is called broker related securities fraud. Many brokers indulge in a practice known as ‘churning’, whereby they increase securities trading and transactions on clients’ accounts, in order to increase their brokerage or commission. This is also a type of securities fraud.
• Micro-cap Securities Fraud: Low priced securities of start up companies are overstated and typically sold to new and first time investors, by their brokers, usually under pressure tactics by unfavorable elements of society. Such type of securities fraud is also known as chop-stock fraud.
• Internet Securities Fraud: Before the advent of the internet, it was not easy to obtain highly sensitive and confidential data about securities. But with the internet, it has become easy to lay your hands on such information, which can then be used to commit securities fraud.

Securities Fraud and Arbitration

If you have any reason to believe that your losses suffered in securities trading has been caused by your broker who was indulging in securities fraud, you may have a legal claim against your broker or the brokerage firm. But it is essential to establish that your losses were solely due to securities fraud.

While trading in securities has a huge potential for profits, there are a lot of risks involved as well. A broker is ethically bound to deal in securities with your best interest in mind, but even with the most sincere efforts, you could lose money in securities trading. Thus, it is paramount that you realize that your losses were not on account of the nature of the trading, but due to securities fraud.

If you have a valid claim, you can address your claim against your broker, through a course of action known as ‘securities arbitration’.

Securities arbitration can help you to recover any losses, if they were caused by unethical and fraudulent acts by a securities broker. This arbitration process was developed as a means to protect investors from corrupt brokers and is not as complex as a lawsuit. Your legal and valid claim will be heard by a board of unbiased arbitrators, whose final judgment is legally binding on all the parties involved in the securities arbitration.