What is Securities Law?
What is insider trading?
How does a securities broker
get paid?
What are the duties of a
broker?
How do I know if I have been
defrauded?
What can I do if I think I
have been defrauded?
What is corporate fraud?
What is investment fraud?
What is Securities
Law?
Securities Law involves the rules
and regulations that regulate the issuance and the sales of
securities. The Securities Act of 1933 and the Securities
Exchange Act of 1934 are major aspects of this type of law.
Securities Fraud occurs when an individual or entity attempt to
illegally manipulate the investment market. Securities fraud may
be committed by brokers, financial advisors, corporations, and
private investors.
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What is insider trading?
If a person buys or sells stock
in a publicly traded company based on non-public information
that they have about that company, it is considered "insider
trading" and is illegal.
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How does a securities broker
get paid?
The broker will earn his income
based on a commission.
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What are the duties of a
broker?
Brokers provide financial
background of a company, the rate of commission, and other
important facts that a client should know before they buy or
sell stock.
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How do I know if I have been
defrauded?
Suspicious activity on the part
of a broker may include:
- Several account statements showing transactions that you
did not make
- Unidentifiable debits or credits on monthly statements
- Losing money when the market is up
- Loss of money in the majority of investments recommended
by your broker
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What can I do if I think I have been defrauded?
The National Association of Securities Dealers (NASD) and
various state securities divisions offer a formal complaint
process to investors, with the filing of a complaint triggering
an investigation of the broker. If the investigation proves that
the broker has engaged in any unlawful practice, the broker will
be subject to formal disciplinary action.
Disputes between investors and their brokers are generally
subject to the arbitration process because most brokerage firms
use an arbitration agreement when you sign up for their
services. Don't let this prevent you from contacting an attorney
or thinking you can't file a lawsuit, because this is not always
the case.
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What is corporate fraud?
When a corporation deliberately conceals information to
appear healthy and successful before its shareholders, it has
committed corporate or shareholder fraud. Corporate fraud may
involve a few individuals or many, depending on the extent to
which employees are informed of their company's financial
practices. Fraud committed by corporations can be devastating,
not only for outside investors who have made share purchases
based on false information, but for employees who, through
401ks, have invested their retirement savings in company stock.
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What is investment fraud?
Investment brokers may commit fraud in an effort to control
the market or lure more business in. The following activities
are considered investment fraud when done intentionally:
- giving biased investment advice
- giving unfounded advice
- offering separate clients contradicting advice
- advising clients to continue an imprudent risk
- advising out of a conflict of interest
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