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Signs that investigators look for when determining whether securities fraud occurred

| May 14, 2021 | Criminal Defense |

When it comes to investment opportunities, there are many different options for investors to choose. There are your standard stocks and bonds, but also angel or venture fund opportunities and cryptocurrencies. There are even subcategories of stocks, such as publically or privately exchanged ones.

The breadth of investment opportunities that exist can make it challenging for an investor to sort out how each option functions, including how much they may initially need to invest and what types of returns they should expect and when. This uncertainty can lead investors or investigators to make unfounded allegations that some impropriety occurred when that might not be the case. 

What can lead to suspicions of securities fraud?

Financial advisors or investment portfolio managers have a fiduciary duty to their clients to act in their best interests at all times. Prosecutors may levy securities fraud charges against you if they allege that you purposely persuaded an investor into making poor choices that served your interests more than their own.

Corporate entities have boards of directors that must keep shareholders informed about a company’s financial status before disseminating any such information to the general public. These corporate officers must be forthcoming with the information they provide shareholders, even if it has the potential of causing them to sell off their shares. Any board member that provides inaccurate information to prevent this from happening may face securities fraud charges. 

Any instance in which a company owner or some other person with access to privileged information tips off stockholders about the pending increase or decrease in the value of shares before such information to investors becomes known to investors constitutes insider trading, which is also unlawful. On the flip side, the practice of encouraging someone to purchase bulk amounts of a specific low-cost stock to artificially inflate its value so that they can sell it off for a profit is also illegal. 

Know that prosecutors must prove that impropriety occurred

Many investigators who work on fraud cases are well-trained in pinpointing potential deception. Financial matters can be complex to understand, though. The burden falls on prosecutors to prove their case beyond a reasonable doubt. You owe to yourself to put up a solid defense to the charges that you’re facing.