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Sadly, many Americans lose their life savings due to criminal actions by stock brokers, corporate executives, brokerage firms, financial analysts, and corporations. If you have been victimized by securities fraud of any kind, take legal action now to recover your financial losses and even be awarded additional damages.
After the 1929 stock market crash and consequent Great Depression, Congress passed two important pieces of legislation to regulate the securities industry: the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws created the U.S. Securities and Exchange Commission (SEC), which is responsible for protecting investors, regulating the securities market, and enforcing and establishing rules to govern financial activity.
What Does the Law Say About Securities Fraud?
Securities laws ensure that companies offering securities for investment are truthful about their businesses, thereby preventing any misrepresentation of risk. In addition, securities laws also ensure that those who sell and trade securities adhere to fair practices by preventing any unauthorized trading and the like.
Despite these laws, stock fraud still very much exists in the U.S., evidenced by the huge corporate scandals in the early 2000s and recent financial crisis. The rise in corporate fraud is alarming because the schemes have become increasingly difficult to unravel. The SEC regulates both Wall Street and private banking, which are vast, high-tech global operations, making oversight extremely complex.
When fraud schemes are revealed, the SEC investigates and typically ends the case with a large fine. If a class of shareholders or individual investors chooses to pursue the matter further, they can hire private law firms to argue their case. Pintas & Mullins Law Firm’ Chicago security fraud attorneys represent individual investors victimized by various forms of fraud throughout the country. This includes anything from shareholder derivatives, to mergers and acquisitions or municipal bond insurance.
For a free legal consultation with a security fraud lawyer serving nationwide, call (800) 794-0444
Common Types of Securities Fraud Claims
The most common claims of securities fraud include:
- Breach of Fiduciary Duty A fiduciary duty is a legal or ethical relationship of trust and confidence between two or more parties. The fiduciary (such as a stockbroker) is legally obligated to act in the best interest of their client. A breach of fiduciary duty occurs when the fiduciary acts in a manner contrary to the interests of their client, sometimes to serve their own interest. In the context of securities fraud, a breach of fiduciary duty may involve any of the following types of illegal acts:
- Churning occurs when a securities broker trades stock unnecessarily to earn more commissions.
- Misrepresentation or Omission of Information, which has influenced an investor’s final decisions regarding their investments.. For example, if a mutual fund participates in underlying investment tactics to illegally inflate fund shares, its investors are damaged and may file suit.
- Unauthorized Trading is defined by a broker making investment decisions that do not follow regulatory procedures for transactions.
- Unsuitability is defined as deliberately placing an investor’s funds in investments that are not appropriate for their overall investment goals.
- Fraud by deceiving the public regarding the financial status, outlook, or procedures of a corporation. This can include investment fraud, securities fraud, commodities fraud, etc.
- Illegal market manipulation is the deliberate attempt to interfere with the free market, by creating false information regarding a security, commodity, or currency.
- Insider trading, or using inside information to illegally purchase or sell securities for personal gain. This may also include “tipping” confidential information.
- Speculation occurs when brokers engage in risky financial transactions to profit from market fluctuations.
There are three types of financial instruments: derivatives, equities, and debt.
- Derivatives are financial contracts (such as futures, swaps, or options) that are marketed through over-the-counter exchanges. The current derivatives market in the U.S. is $600+ trillion dollars, and largely unregulated due to the Commodity Futures Modernization Act of 2000. Thus, many shareholder derivative lawsuits are being filed against companies who breached fiduciary duties. Through derivatives lawsuits, shareholders can help restore investment value and deter misconduct.
- Equities are what companies use to raise capital, by offering investors a partial interest in ownership, better known as stock. Any purchase or sale of stock based on false information is considered securities fraud.
- Debt is accrued by companies to raise capital, through issuing bonds or mortgages, such as mortgage-backed securities. Bonds are also referred to as fixed-income investments.
When companies manipulate or mismanage these financial instruments, shareholders are severely affected. We assist both individual and class action securities fraud cases to recover capital losses.
Security Fraud Lawyer Near Me (800) 794-0444
Need Counsel? We’re Here to Help.
If you or someone you know have been a victim of securities fraud, contact us immediately for a free no-obligation consultation. Our securities fraud attorneys at Pintas & Mullins Law Firm fight aggressively to recover the money investors lost in fraud schemes for clients nationwide-and we travel to you. To learn more about potential securities cases, contact our firm at (800) 794-0444 or fill out a consultation form.
- Cornell University Law School Securities Law Overview
- U.S. Securities and Exchange Commission (S.E.C.) Advice on Securities Fraud
- Financial Industry Regulatory Authority (FINRA) Investor Complaint Center