Securities fraud happens when investors are given false information by their financial advisors, and when this information is used to make decisions about buying and selling, leading to losses. Fraudulent practices include fraud, churning, unsuitability, and/or negligence. Securities fraud is also known as stock fraud or investment fraud. It violates securities laws and people who have been the targets of such practices do have the right to sue financial advisors. Litigation attorneys can advise and represent them in order to achieve the best possible settlement.
Securities or investment fraud
Securities brokerages operate on a vast scale. As of 2015, the number of securities brokerages in the U.S. was 26,823, with a combined total payroll of $63 Billion. With financial activity on this scale, the potential for fraud is correspondingly large. As of 2014, the number of pending securities and commodities fraud cases was 1,639 and the number of pending corporate fraud cases was 633.
Famous cases of securities fraud in 2015 included cases against Deutsche Bank and Bank of America for misleading investors by providing wrong or incomplete information. One of the best known cases of securities fraud involved Bernie Madoff, who was responsible for defrauding his victims of an impressive total of $20 billion. He is now serving a one hundred and fifty year prison term.
Claims against financial advisors
Financial services litigation can serve investors, broker-dealers, and stockbrokers/financial advisors. Cases of securities fraud are generally heard and decided by Financial Industry Regulatory Authority (FINRA) arbitration panels. Litigation may involve claims by investors against advisors and brokers, or claims by broker-dealers against investors or advisors.
Litigation attorneys who have the same certifications as broker-dealers can view each situation from a number of different viewpoints and offer the best solutions. Many securities fraud attorneys also offer related services like probate litigation and serve as estate planning attorneys.
Securities and Exchange Commission litigation
Cases of securities fraud can also be litigated by the U.S. Securities and Exchange Commission or SEC, as well as by securities fraud lawyers. The mission of the SEC is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” The SEC was founded in 1934, following the Great Depression.
The goals of the SEC were based on common sense rules about fairness. They required companies offering securities for public investment dollars to share information about the businesses, the securities, and the risks. Brokers, dealers, and exchanges must also treat investors fairly and put their interests first. In 2014, the SEC litigated a record number of enforcement actions. The 755 enforcement actions resulted in orders for disgorgement and penalties worth $4.16 billion.
Anyone who has been a victim of securities fraud has the right to sue those responsible for their losses. Representation by knowledgeable litigation attorneys can help to ensure the success of the case.