Securities fraud, also known as investment fraud are misleading information in the stock markets that woo entrepreneurs into investing, based on wrong information, and result in great losses and breaching of security laws. Also, securities fraud can come from stealing from investors through the manipulation of the stock market and giving misleading information to auditors.
TYPES OF SECURITIES FRAUD
Internet frauds. Fraudsters use automated data generations to single out their targets. They go around chat rooms and groups to sell false information. There are several ways in which the internet frauds take place. For instance, through emails. The spasm emails are in most cases newsletters that provide incomplete information. Others will use this access to have people’s personal information. Secondly, the introduction of viruses which are in most cases disguised as amazing deals and offers. Thirdly, through hiked stock prices. These stocks are sold to targets through fabricated information. After the inflated price reaches a limit, fraudsters sell them and bring back the stocks to their low prices.
Spurious business deals. The selling qualification in this fraud is a promising business with very minimal investment. Some major examples include oil and gas deals, land and equipment leasing, new business ventures which promise to bring back your investment with a profit in a short time and warranted deals from the government and companies. However, most of these franchise deals are legit but this trusting instinct provides a good platform for potential fraud.
Insider trading. This kind of fraud involves personnel working closely with the company. It’s important to note that some insider trading is legit but fraudsters involve reports and certain documentation that is known by the company. However, if an employer engages in non-public notices and acts in his accord parallel to the company, then it becomes fraud. Most people fall bait of this because the information provided is real as insiders are people who have access to very vital company information.
In any of these cases, it helps if you have a good defense. Check out this article on TGD that answer the 10 most commong questions regarding securities fraud: Securities Fraud Defense TGDaily
HOW TO DETECT AND AVOID FRAUD
Fraudsters mostly use emotional appeals to woo people into their trap. They will use fabricated information and testimonials showing a possible gold mine at a lower investment. Potential investors are supposed to conduct thorough research, include offline resources as well before getting into any investment. This measure reduces the risk of fraud. Besides, testimonials should be investigated to reduce doubts.
Finally, in case of fraud, people are encouraged to report to the Federal Trade Commission and the local authorities, freeze their credit cards, and create fraud alerts on them. The public is advised to form a habit of monitoring credit/debit cards and accounts for any unauthorized action and obtain new ones in case they are in doubt of any unscrupulous dealings.