Preventing Securities Fraud – How to Protect Yourself
Investment fraud is not limited to stock frauds and securities fraud. Instead, it spans a wide spectrum of scams that include invention scams and rare item investment scams. The scope of investment scams has reached epic proportions with millions of dollars being fraudulently stolen from consumers each year.
If you want to protect yourself from investment frauds and scams that you need to learn how to identify the warning signs of a potential scam. The first warning sign is that the offer sounds too good to be true. The second warning sign is that the seller of the offer is using high-pressure sales tactics such as forcing you to make a decision to invest right now. Another warning sign is that you are contacted via phone without requesting information about the investment opportunity. The scam artist may also ask for your social security number or credit card information over the phone. These are all signs that you are being targeted by a scam artist. There are several federal documents and pamphlets that you should read through that tell you what to look for and what scams are currently circulating. You can request fraud education materials from the Federal Trade Commission, the SEC, and from your state’s securities regulator.
If you find that you have been victimized by a securities fraud or some other type of investment fraud then you need to take immediate action to correct the situation. First, you need to report your victimization to the authorities. Try to provide them with as much information as you can about who contacted you, how they contacted you, how you funded your investment and any other information that you have. You will also want to contact a SEC lawyer, a securities fraud attorney or an investment fraud lawyer. They will be able to help you develop a case against the company or person who victimized you, they will be able to answer your questions, and they will help you to win your lawsuit against the perpetrators of the fraud in question.
Laws and Stocks: Bringing Transparency to the Economy
Every business has an original capital invested at the time of business launch. It is different from property and assets. The value fluctuates from time to time. This stock of a business is divided into shares. Based on the total amount of stock, every share is assigned a particular value.
Shares represent a fraction of ownership to the business. The ownership of this asset is determined by issuing a stock certificate. It’s a legal document that authenticates the number of shares owned by a shareholder. A private, as well as a public company, can have shareholders.
Shareholders are people or another organization owning shares of a company. The largest shareholders aren’t retail buyers. They are rather corporate entities or other large mutual funds. Owning even fifty percent or more shares doesn’t entitle them to use property, equipment, etc of that company. This is because the company is considered as a legal entity.
In this regard, a stock exchange holds an importance place. It is a marketplace where a company with shares has to get enlisted in order to sell shares to several prospective buyers. Famous stock exchanges are BSE, NSE, NASDAQ, etc which can be cited as examples.
There are big and small companies whose shares are traded every day on several stock exchanges across the world. The market value of several large international corporations like Oracle, Microsoft, Siemens, etc. runs into millions of dollars. As a result, there is a scope of stock related frauds too.
These frauds run into millions or even billions of dollars worth. Crimes related to stocks are labeled under white collar crimes. This is because of the financial knowledge required to commit these crimes. Since these types of frauds affect not only large-scale stockholders but also retail share traders. Class action lawsuit is the obvious option to get relief legally.
Broker Fraud and Class-Action Lawsuits
Broker fraud is the illegal act of deceiving an investor or violating his or her instructions in order to benefit the broker or the brokerage firm. Stockbrokers have a responsibility to act sensibly with clients’ money and to avoid unnecessary or unreasonable risk. When they fail to do so, they may not only be in violation of the law, but they may also be liable for any financial damages caused to the client.
If you suspect your broker of committing fraud and hurting your investments, consider consulting with a securities fraud class-action lawyer as soon as possible.
Types of Broker Fraud
This type of fraudulent activity can be found at all levels of investing. There are many ways that a broker may commit fraud, including:
- Unauthorized trading: Acting without the client’s permission or violating his or her explicit instructions
- Misrepresentation or omission: Misrepresenting or omitting facts regarding investments
- Unsuitability: Making investment suggestions that are not suitable for an investor’s needs or accepted level of risk
- Churning: Unnecessarily buying or selling stock to gain greater commission payments
- Overconcentration: Overconcentrating an investor’s stock portfolio in a single stock or a few stocks
Any of these acts of fraud can cause significant damage to investors’ finances. Not only is this type of fraud a violation of the law, but it is also a violation of clients’ trust that can qualify as grounds for a class-action lawsuit. If you are an investor and suspect or have evidence of broker fraud, you may be entitled to recover compensation for your financial losses.