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Securities And Investment Fraud: Protecting Investors

Laws protect investors from illegal actions by corporations that sell stocks, stockbrokers and other financial entities. Illegal activities include material representations and omissions. Fraudulent transactions, including stock option backdating, are also not allowable. Ponzi schemes sometimes cause large numbers of investors to lose money in a short time through deceitful accounting and other irregularities.

Investors who have been cheated may recover their losses through legal remedies, including the following:

  • Class action lawsuits
  • Direct claims by individual investors against sellers or brokers
  • Derivative actions

Edelson Lechtzin LLP has built a strong reputation for successful representation of high net worth investors who have experienced significant losses through securities law violations. Our clients come to us from throughout the United States.

What Are The Common Types Of Securities Fraud?

Securities fraud encompasses a range of illegal activities that involve deceit or manipulation in the trading of securities. Common types of securities fraud include the following:

  • Affinity Fraud: This deceptively exploits trust within specific communities such as religious or ethnic groups, using shared bonds to gain credibility and lure victims into fraudulent investment schemes, ultimately betraying their trust and causing financial harm.
  • Pump-and-dump scheme: This involves orchestrating the artificial inflation of stock prices by disseminating false or exaggerated information, enticing investors to buy shares at inflated prices. Subsequently, the perpetrators sell off their own shares causing the stock price to fall and leaving unsuspecting investors with significant losses.
  • Insider trading: This involves the illegal trading of stocks based on non-public, material information about a company, giving insiders an unfair advantage over the broader market. This unethical practice erodes market integrity and undermines investor confidence in the fairness of the financial markets.
  • Accounting fraud: This involves the manipulation of financial statements through deceptive practices such as inflating revenues, understating expenses or hiding liabilities, presenting a false picture of a company’s financial health. This undermines investor trust and can lead to significant financial losses when the truth is eventually revealed.
  • High-yield investment fraud: These are schemes promising unusually high returns with little or no risk that prey on investors’ desire for quick profits, often targeting vulnerable individuals such as retirees. These fraudulent schemes, including Ponzi or pyramid schemes, inevitably collapse leaving most investors with substantial losses.
  • Stock fraud: This encompasses a wide range of fraudulent activities in the stock market, including false statements, unauthorized trading and market manipulation. Fraudsters deceive investors through misrepresentations about companies, misleading trading practices or other deceptive tactics, resulting in financial losses for unsuspecting investors.

Securities fraud causes extensive financial losses and erodes the integrity of financial markets, ultimately harming both individual investors and the broader economy.

Aggressive Securities And Investment Fraud Representation

Warning signs of securities and investment fraud include illegal sharing of insider information and sudden drops in stock values. Attorneys at our firm investigate and prosecute claims against entities that have defrauded our clients. When we uncover evidence of liability and wrongdoing, we craft strategies for recovering suitable damages for our investor clients.

When we accept a securities fraud or investment fraud case or initiate a class action, we do so on a contingency basis. In other words, if we take your case, you will not owe us attorney fees initially. Our remuneration will be a percentage of the recovery that we obtain on your behalf.

Frequently Asked Questions About Securities And Investment Fraud

It is only natural to have questions when you have been victimized by fraud. Here are some of the questions our firm hears most often:

What are common signs of securities investment fraud?

Securities investment fraud is aimed at deceiving investors and illegally profiting from their funds. Signs of securities investment fraud include:

  • Guaranteeing high rates of return with low/no risk
  • Pressure to make quick decisions
  • Offering unregistered securities or involving unlicensed sellers
  • Complex investment strategies with vague explanations
  • Difficulties in withdrawing funds or delays in receiving returns
  • Insufficient documentation or refusing to disclose clear information
  • Promising exclusive or secretive investment opportunities

Securities and investment fraud can include stock price fixing, accounting fraud, “pump and dump” schemes, high-yield investment fraud and many other investment scams. Remember: scam artists are endlessly creative, especially when they are involved in the financial markets.

What exactly is insider trading?

Insider trading refers to the illegal practice of trading stocks or other securities based on material, nonpublic information about the company. This privileged information can give insiders an unfair advantage over other investors, leading to market manipulation and unfair gains.

How do you prove securities fraud, and how hard is securities fraud to prove?

Proving securities fraud involves demonstrating that the accused party knowingly engaged in deceptive or manipulative practices in the securities market. While it can be challenging to prove, several steps can help establish a case of securities fraud:

  • Material misrepresentation or omission: Show that the accused made false statements or failed to disclose material information about the investment.
  • Scienter: Establish the intent to deceive or manipulate, often by demonstrating the accused’s knowledge of the false statements or omissions.
  • Reliance: Demonstrate that the victim relied on false information or omissions when making investment decisions.
  • Loss causation: Link the fraudulent conduct to the investor’s losses, showing that the fraud directly caused financial harm.
  • Proximate cause: Establish a direct connection between the defendant’s actions and the investor’s losses, proving that the fraud was a substantial factor.

A skilled securities fraud attorney can help you assess the strengths and weaknesses of your case.

Warning Signs Of Investment Fraud

Investment fraud may rear its ugly head in various ways, but there are some common warning signs to watch out for. These include:

  • Promises of astronomical profits: If you are promised exorbitant profits that seem too good to be true, it’s likely a red flag. Investment returns are generally commensurate with risk, so if someone is guaranteeing unusually high returns without adequately explaining how they will achieve them or without acknowledging the associated risks, it could be a sign of investment fraud.
  • Unsolicited adverts and marketing: Unscrupulous sellers will bombard you with unsolicited advertisements and marketing materials, often through email, phone calls or social media messages. These communications may pressure you to act quickly, creating a sense of urgency to invest without giving you enough time to research or consider the opportunity properly.
  • Promises of exclusive information: When your seller promises exclusive or inside information that will give you a significant advantage over other investors, proceed with caution. Investment decisions should be based on thorough research and analysis of publicly available information rather than relying on privileged insights that may be illegal or unethical to possess.
  • High-pressure sales tactics: Fraudulent sellers will often use aggressive and persistent tactics to pressure you into making a quick investment decision. They may employ techniques such as repeated phone calls, urgent deadlines and exaggerated claims about the limited availability of the investment opportunity. These tactics are designed to exploit your fear of missing out (FOMO) and push you into committing funds before you have a chance to fully evaluate the risks.
  • Poor communication: If you notice a pattern of unprofessional business conduct, such as evasiveness, vague answers to your questions or difficulty reaching the seller or company representatives, it could be a sign of investment fraud. Legitimate investment opportunities should involve clear and transparent communication between the investor and the seller or company.

At Edelson Lechtzin LLP, we leverage our extensive experience to provide you with sound legal guidance on dealing with investment fraud.

Did You Lose Substantial Assets In A Ponzi Scheme?

No matter how you lost money on investments or what prompted you to look for a lawyer’s advice on investment fraud, Edelson Lechtzin LLP is here for you. From our law offices in Philadelphia, we offer free consultations for clients nationwide with no further obligation.

To request a case analysis, call 844-696-7492 or complete our online form. We will get back to you very soon.

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If you believe you were the victim of securities fraud, click “Join Investigation” below to provide us the information we need to determine your eligibility. If you qualify, someone from our firm will contact you for a free consultation regarding a potential lawsuit to recover your losses.

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