Surely, you might have come across individuals who are sued by other individuals or companies for securities fraud. Securities fraud might sound familiar to you but what exactly is it?
What exactly is securities fraud?
It could be defined as the use of any deceptive means to buy, trade, or sell securities. It is often categorized as a white-collar crime because it doesn’t involve physical burglary. It goes far as falsifying any records or security trading statistics with the motive to defraud. Investors who rely on the securities to make a profit or trade in the future end up falling victim to the ill motives of unscrupulous individuals hence the term securities fraud. The practice may take several forms and people of different ranks may participate in the highly discouraged activity. You may have stockbrokers taking advantage of naive clients mostly through embezzlement of funds as well as providing misleading information.
What constitutes securities fraud?
It should be clear that individuals and organizations who decide to invest in securities such as stocks, bonds, debentures among many others are taking risks. It’s highly encouraged that investors should take time and follow the right steps in identifying the ideal company that will help protect their investment. Securities fraud is a vice that some individuals master by providing false information to extort investors. As an investor its wise to comprehend that securities fraud is not only limited to stock and securities but it also spans to invention and rare item investment scams. There is a worrying trend where investment scams are fraudulently stealing millions of dollars from investors which should serve as a wake-up call.
How to Protect Yourself From Security Frauds
Understanding the kind of risk associated with your investment, it’s a wise move to learn how to mitigate any losses. Familiarizing yourself with some of the common scams and frauds will help you evade such catastrophe. Getting exposure will help you identify the red flags at an early stage. Firstly, be wary of an investment proposal that may sound too good to be true. Secondly, avoid closing a deal with a seller using pressure sales tactics. Thirdly, avoid working with individuals who contact you via phone presenting sumptuous information regarding an investment opportunity. If all fails contact a defense lawyer. We found this great article that already answers 10 questions on securities fraud that most people didn’t know about. Give it a read.
Scam artists can also go as far as requesting or stealing your credit card information and social security number through your phone. Look for regularly updated pamphlets and federal documents that pinpoint the current scams. There also bodies such as the Federal Trade Commission, state’s securities regulator, and the SEC who can provide you with fraud education materials. Be vigilant and avoid becoming a victim of unscrupulous individuals.