Securities Fraud, Stock Fraud, Investment Fraud = Deceptive Practices in the Stock Markets
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false or misleading information, resulting in losses, in violation of securities laws. The types of misrepresentation involved include providing false information, withholding key information, and offering bad advice.
Some Investors Don’t Know that They’re Protected Against This Fraud by Civil Law
Investors are protected against fraudulent securities activities by several civil laws. The Securities Exchange Act of 1934 and Rule 10b-5 protect investors against deceptive and manipulative acts in the purchase or sale of securities. Rule 10b-5 makes it unlawful to employ a device or scheme to defraud, to make any untrue statement of material fact or omit to state a material fact not misleading, or to engage in any practice that would operate as a fraud.
Additionally, a vast majority of states have passed “blue sky” laws that regulate the securities industry and protect investors. Even if a state has not enacted specific securities laws, an investor can still pursue a claim under theories of common law fraud.
Have You Lose Money Due to Securities Fraud? Recover Your Losses!
Investors can pursue claims against financial advisors or brokerage firms under the Rules of the Financial Industry Regulatory Authority (FINRA). FINRA rules require fair dealing with customers and covers a variety of improper sales practices including churning, false accounts, unauthorized trading, and misuse of customer funds.