What is Securities Fraud?
Securities fraud is any type of deception used that is intended to induce an investor to make a trade on the basis of false or misleading information. The term is used interchangeably with investment fraud and stock fraud. Fraudsters target both unsophisticated investors and experienced, savvy investors.
The Different Types of Securities Fraud
Securities or investment fraud scams come in all shapes and sizes. Some common forms include insider trading, internet fraud, Ponzi schemes, and stock price manipulation.
How to Avoid Securities Fraud
Before you invest, make sure you do your homework. Do not be bashful about asking as many questions as you need to in order to fully understand what you’re getting involved with. Scammers rely on you not investigating before giving them your money. If the solicitor is someone whom you don’t know, look into their background and their license to sell securities. Are they registered and licensed to sell what they are promoting? You can find out who is soliciting you and what they are offering by using online tools, such as FINRA’s BrokerCheck and general Google searches.
If you cannot find enough information about an investment, you should get a second opinion from a qualified professional. Finally, if someone is pressuring you to invest without giving you the chance to perform your due diligence, or by guaranteeing significant rates of return or offering a free seminar with some incentive for your participation, these should all raise red flags.
Remember: when it comes to investing, if it sounds too good to be true, it probably is.
Were You a Victim of Securities Fraud?
If you suffered investment losses because your broker or brokerage firm committed securities fraud, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.