Otherwise referred to as stock fraud, investment fraud can happen in many ways. This type of fraud occurs when someone misrepresents any information an investor would use to make investing-related decisions. Securities fraud can involve organizations, corporations, banks and individual stockbrokers. If you want to protect your company in California, it’s wise to learn about the most common forms of securities fraud.
Gaining a deeper understanding of securities fraud
Securities fraud is one of many white collar crimes. Ponzi schemes, broker embezzlement and late-day trading are just a few forms of securities fraud. A person or company committing securities fraud might withhold information about an investment, offer intentionally bad advice, or act on insider information.
The most common types of securities fraud
There are many methods of committing securities fraud. One type of securities fraud involves high-yield investments. You can avoid committing this type of fraud by not offering high return rates with little to no money from your investors. Investing always comes with risk.
Another form of securities fraud is a Ponzi scheme. This type of scam involves getting together a group of investors. In a Ponzi scheme, you promise your original group of people money from the initial investments of any newly recruited investors.
There’s also a newer form of securities fraud involving the internet. Otherwise known as a pump-and-dump scheme, this involves people using online forums and message boards to post false information about stocks. If everything goes to plan, this information falsely inflates a stock’s price, and it gets sold off.
The thought of facing securities fraud charges can be understandably stressful. If you need help during this daunting time, consider contacting a lawyer. By doing this, you’ll have someone on your side that works on behalf of your company.