Home & Securities Lawyers Attorneys

Custom Links:

**Home Page

 

SECURITIES FRAUD

--------------------------------------------------------------------------------

What is a security?

The definition of a security encompasses many things; generally, a security includes stocks, bonds, commodities and other investments.

What is securities fraud?

Securities fraud can be described as deceptive practices in the stock and commodity markets. Generally, securities fraud occurs when investors are enticed to part with their money based on untrue statements. Securities Fraud is illegal.

Examples of securities fraud:

A) Providing false information on a company financial statement.
B) Providing false information on Securities and Exchange Commission (SEC) filings.
C) Lying to the company auditors.
D) Insider trading.
E) Stock manipulation schemes.
F) Broker embezzlements.

Who may be involved in securities fraud?

Securities fraud may be committed by, among others, investors, employees of a brokerage houses, corporate executives or their shareholders, or by other market participants.

What can I do to assist in combating securities fraud?

Securities Fraud destroys our confidence in the securities and investments markets and casts doubt over investments into legitimate companies. Therefore, it is very important to identify and report these crimes.

Securities fraud schemes are very secretive and are carried out behind closed doors.

Following the Money Off-Shore

The Fortuna Alliance case demonstrates that fraud promoters not only market their investments internationally, but transfer their assets across borders as well. The U.S. District Court for the Western District of Washington froze Fortuna's assets, then found three of the individual defendants to be in contempt of its orders because they failed to repatriate Fortuna funds they had transferred to Antigua. The FTC's effort to enforce the Court's asset freeze was accomplished with help from the Washington State Department of Financial Institutions.

In FTC v. Online Communications, et al., another 1996 case, one of the defendants had transferred profits from the allegedly fraudulent, underlying enterprise to the Bahamas prior to the Court's entry of an order freezing the defendant's assets. The U.S. Department of Justice's Office of Foreign Litigation brought action in the Bahamas and obtained an injunction freezing the defendant's assets in the Bahamas.(15) The defendant agreed to settle the case and repatriate over $300,000 to the U.S. This was the first time the U.S. government obtained an asset freeze issued by a foreign court and returned the frozen funds for distribution to American telemarketing fraud victims.

The history of investment fraud demonstrates that fraud promoters look to the mainstream marketplace for ideas to imitate and for ways to induce consumers to invest. Law enforcement officials and consumers need to follow the headlines to forecast likely fraudulent investment schemes in 1997. Based on recent news stories fraud watchers can expect to see "too good to be true" pitches regarding Internet business investments and partnerships to build out new "information superhighway" communications systems. Fraud busters also will be looking for changing regulations affecting investments, because investment fraud promoters take advantage of changes in securities laws and telecommunications rules to come up with new investment fraud strategies.(16)