Securities fraud is any type of deception, misrepresentation, or omission intended to induce an investor to buy, sell, or hold a security. The term is sometimes referred to as investment fraud or stock fraud. Fraudsters target both unsophisticated investors and experienced, savvy investors. Regardless of what you call it, securities fraud is illegal.
The Different Types of Securities Fraud
Securities or investment fraud scams come in all shapes and sizes. Some common forms of securities fraud include insider trading, internet fraud, Ponzi schemes, stock price manipulation, churning, and general misrepresentation or omissions of material information.
How to Avoid Securities Fraud
Don’t fall for to-good-to-be-true sales pitches that claim enormous rates of return with little to no risk. And do not be afraid to ask as many questions as you need to in order to fully understand the investment. If you choose to invest, look into the broker’s or salesperson’s background and confirm they have a license to sell securities. Also pay close attention to any history of customer complaints the broker may have or regulatory trouble that the person has been in. You can find out who is soliciting you by using online tools, such as FINRA’s BrokerCheck at https://brokercheck.finra.org/. If you cannot find enough information about an investment or about the salesperson or broker, you should get a second opinion from a qualified professional.
If someone is pressuring you to invest, guaranteeing significant rates of return, or offering a free seminar with some incentive for your participation, take time to investigate further. These tactics are commonly used in schemes involving securities fraud and should 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.