Stock fraud is misrepresenting information used by investors to make decisions. It is also known as securities or investment fraud. This crime can be committed by a stockbroker, brokerage company, investment firm, or other financial institution.
Types of Securities Fraud
Securities fraud can be committed in many forms; there is no limit to the methods unscrupulous individuals may use to trick investors.
Some investment firms use advance fee schemes to obligate investors to make small payments with the false promise of greater returns. In pump and dump schemes, fraudsters use social media and chat forums to spread false information about stocks. The objective is to ensure a stock price increase to sell off or dump the stocks for profit.
Ponzi and pyramid schemes are created by obtaining funds from new investors to pay returns to older investors. For the scheme to be successful more victims, need to be pouched. At times money is requested to cover taxes and processing fees for funds that are supposed to be disbursed.
Brokers may also dupe their clients by recommending unsuitable investments. A broker needs to take the needs and financial situation of a client into account before making decisions. Therefore, brokers who do not consider their clients’ financial interests commit fraud.
Anyone can be a victim of stock fraud. However, not everyone understands how to prevent or recognize it. As an investor, it is essential to learn about different types of fraud schemes to avoid being a victim.
How to Recognize and Prevent Securities Fraud
Researching investments before making a financial commitment is one of the best ways to prevent securities fraud. Investigate the investment and seller through external sources. Research the company, call federal and state securities to confirm the authenticity of the broker or company. Check if there have been previous complaints against the investment firm and do a background check to rule out criminal activity.
Avoid unsolicited investment offers, requests to give your personal details via phone or internet, or high-pressure sales tactics. Remember, con artists have perfected the art and can be very suave. Do not trust investment firms by the appearance of their websites. A well-done website does not guarantee the authenticity of an investment. Consider enlisting the services of a top-rated securities litigation attorney near you before making any financial investment decisions.
When to Speak to an Attorney
Know the right time to consult a top securities lawyer near me, which is every time you want to invest. Being duped comes with a certain level of embarrassment, which is why many victims of fraud fail to contact their attorneys. Do not be embarrassed; even the smartest investors fall victim to securities fraud.
Securities and investment fraud lawyers will report the incident to the Securities and Exchange Commission, state regulators, and law enforcement to prevent other people from falling victim. The sooner a victim takes action, the quicker they can get the help they need.
Financial investments lawyers can help file a lawsuit or arbitration on your behalf. Brokers who intentionally withhold, exaggerate, or misrepresent information for personal gains can be held culpable for securities fraud.
Contact an investment fraud lawyer near you if you suspect securities fraud. Please Contact Chris Bebel Teftteller Law for a free consultation with the best securities fraud lawyer: 903-843-5678