Securities Fraud Legal Claims

Securities Fraud Legal Claims

What is securities fraud?

Securities fraud is the buying or selling of securities not registered with the Securities and Exchange Commission, or willingly making false statements or omissions of fact in documents filed with the Securities and Exchange Commission.

To be charged with securities fraud, it must be proven that the accused acted with the intent to defraud, lied or misled a person during the sale or purchase of securities, and used a means of interstate commerce, mail, or any facility of any national securities exchange. Securities fraud is a criminal act that may be punished with large fines and prison. Securities regulations exist to prevent securities fraud by encouraging fair and full disclosure of all information relating to markets, securities transactions, and financing and financial reporting by public companies. Brokers have certain responsibilities to investors and violations of these duties may result in securities fraud.

Excessive trading, or churning, by the broker to generate commissions is a form of securities fraud. A broker may also commit securities fraud by convincing a client that he/she has undisclosed information about a stock. This is called trading on insider information. It is considered securities fraud when a broker makes trades in a customer's account without permission, even if he/she calls the customer afterwards to notify them of the trade.

Victims of securities fraud may be eligible for compensation for their lost investments, the money those investments should have been generating, and legal fees. Charges of securities fraud are time sensitive due to the statute of limitations and legal action should be taken immediately upon discovering a problem.