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Examples of securities fraud that often leads to an investigation

On Behalf of | Oct 5, 2021 | FINRA And SEC Investigations

As you probably know, New York City is arguably the most important financial hub in the United States. Every day, Wall St. investors trade in securities, usually with little or no legal issues.

However, some actions by investors attract the interest of securities and corporate investigators. If you are not careful, such investigations can lead to legal trouble if fraud is found to be a factor.

Examples of securities fraud

It is safe to say that most people working with securities strive to comply with federal regulations. However, fraud, whether intentional or accidental, can occur. If investigators find you guilty of fraud, you will likely face severe financial repercussions and possibly even a criminal conviction.

Learning what activities are and are not fraudulent can help you remain in compliance. Below are three examples of securities fraud that investigators are sure to examine closely.

  1. Insider trading: It is illegal to use confidential information (not available to the public) about an entity’s financial state to make trading or investment decisions. Allegations of insider trading nearly always result in securities or corporate investigations.
  2. Third-party misrepresentation: Giving potential investors false information about companies or the stock market, in general, is a type of fraud. Investigators typically delve deeply into these cases and take aggressive action against the alleged perpetrators.
  3. Company fraud: It is also illegal for the leaders of a company to provide false information about their organization for the purpose of inflating stock prices. An infamous example of this type of fraud is the Enron scandal that dominated headlines in the early 2000s.

You can avoid securities and corporate investigations by learning more about securities fraud. Partnering with a knowledgeable legal representative can also ensure all your investment practices remain above board and 100% legal.