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Different Types Of Securities Fraud

Securities fraud is the process of convincing consumers to purchase stock using false information. There are many different types of securities fraud. In some cases, stocks are purchased for risky investments without a proper risk analysis, so the loss seems greater. This practice violates laws put in place to make sure the loss of capital does not become a major problem. The Securities Investor Protection Corporation (SPIC), the Securities and Exchange Commission (SEC), the Federal Trade Commission and the Federal Bureau of Investigation (FBI) investigate securities fraud.

Internet Fraud

In the digital age, Internet fraud is becoming an increasing problem. This fraud takes place when individuals use the Internet or computer software to take advantage of other people without their knowledge.  Email and websites are two of the major areas where Internet fraud exists and allows criminals to access personal information to commit identity theft. Millions of people purchase security software to prevent viruses and malware to infect their computers, so security software with viruses advertised as safe products are another major problem with Internet fraud. Another problem in Internet fraud is scalping. This is the process of creating newsletters and bulletins advertising up and coming companies or products to increase that companies stock. The interest in the company drives the stock higher so it is worth more, and the creators of the newsletter or bulletin sell the shares to earn more money.

Corporate Fraud

The most common type of fraud is corporate fraud. This type of fraud occurs when a corporation commits crimes or people who represent the interests of a business commit crimes varying from embezzling money from investors, forging financial statements to hide money, bribing public officials, and manipulating the stock market to earn more money with minimum loss. Corporate fraud is illegal at both the state and federal level. Federal laws are broken when money is not taxed properly and the deception includes people and funds not limited to one state. Records and stocks are manipulated by corporations to show a large number of assets and revenues without an abundance of costs or liabilities, so the profit is much greater.

Securities fraud is a federal crime, but the amount of loss can be difficult to quantify. Fraud can include the loss of billions of dollars or causing money and stock to decrease in value over time. Many types of securities fraud exist, with Internet fraud and corporate fraud being the most prominent. Securities fraud litigation can take place inside major corporations that rely on stock prices for global financial gain in industries dealing with finance or natural resources. Internet fraud is becoming a large problem with people obtaining personal information through email, clicking links, buying antivirus software, entering chat rooms and scalping. People who commit securities fraud are always caught due to the several organizations that have been put in place to prevent this fraud, despite larger sums of money lost can never be replaced. The instant gratification of manipulating money goes away with life long prison sentences.

My name is Geoff Leary and I wanted to build rocket ships, but I’m settling for being a freelance writer here in Upstate New York. I like to take action & make inspiration. I write about a range of topics, just to keep things crispy and fresh.

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