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The risks of securities fraud

On Behalf of | May 10, 2022 | Uncategorized |

Fraud takes many forms, and one of the more troubling versions involves securities. Investors want to see a return on investment for any capital they put forth. Florida investors likely expect to face a level of risk, but they doubtfully expect to deal with fraud. However, companies, brokerage firms, and others involved in finance may lie to or otherwise deceive investors.

Securities fraud explained

Investors may rely on the information presented in news articles to make a stock purchase. Sometimes, they rely on a stockbroker’s opinion before deciding. Journalists, analysts, and stockbrokers can make mistakes. However, when someone engages in outright, deliberate misrepresentation, things rise to a potential criminal level.

A stockbroker might attempt to convince someone to put money into a company based on a lie. The broker may deceive the investor, knowing that the investment comes with a commission payable to the broker. In some cases, a company may release false reports that indicate profits where losses occurred. Such behaviors could lead to legal troubles.

Securities fraud plans might involve developing pyramid or Ponzi schemes. Insider trading also presents potential criminal charges for those engaged in illicit activities. Those charges could come with the threat of many years in prison.

Criminal charges and securities fraud

Anyone facing federal securities fraud charges likely worries about a conviction, especially when they did nothing wrong. Again, people make mistakes. While some mistakes could lead to a lawsuit, making mistakes might not be a crime.

Law enforcement officials may violate the law when targeting someone in a fraud investigation. Coercing witnesses or illegally procuring evidence could ruin the case.

When a case is strong and a conviction appears likely, plea bargaining may be advisable. A plea bargain could lead to reduced charges or a lesser punishment.