Securities Fraud

When the laws and regulations set forth by the United States Securities and Exchange Commission (SEC) are violated by criminals, it constitutes securities fraud. Offenders of these laws can include corporations, stock brokers, brokerage firms, analysts and even private share holders. When dealing with fraud in relation to securities trading, punishment for these crimes can include both criminal and civil retribution.

Criminal investigations led by the SEC and the National Association of Securities Dealers (NASD) could very well lead to imprisonment when dealing with securities fraud charges. Civil fines may also be imposed against individuals or corporations in question of fraud related to illegal trading. There have been talks of the United States government wishing to increase the mandatory prison sentencing for this type of fraud to ten years.

There are several different types of securities fraud, but the most common include insider trading, accounting fraud and misrepresentation. Insider trading occurs when an exchange of stock is based on non-publicized information gathered by an employee of the stock company in question. Accounting fraud has to deal with accountants keeping false books and financial records purposefully. When a company or representative of said company presents falsified information to the public or investors, it is known as misrepresentation.

When a company hides its debts or falsely inflates its earnings reports to purposefully deceive investors, it is known as shareholder fraud. This type of activity can ultimately cost employees their job and even their retirement fund set up through the company's 401(k). Another type of illegal deceit that has to do with securities is investment and brokerage fraud. When false information is given to stock holders by investment and brokerage houses, it is done so with the manipulation of the market in mind.

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