Business & Securities Fraud: An Overview
The U.S. economy is one of the strongest in the world, and it is built on attracting investment capital and generating revenue. One of the biggest sources of capital for public companies comes in the form of private investment in securities, consisting of a variety of financial instruments, but it is most often associated with purchase and sale of stock in publicly held companies.
Securities investments can be made by individuals buying specific stocks or investing in a fund comprising a group of stocks. The investment can also be made by an institution, such as public employee retirement funds. Institutions carry great weight in the market due to the large sums of money they invest. It is important for these investments to be secure and for investors to feel confident that their investment is in a legitimate business.
Providing You With The Necessary Information
The first major law regulating securities, the Securities Act of 1933, was passed to meet two main objectives: to inform investors of financial and other significant information about securities offered for public sale and to prevent deceit, misrepresentation and other fraud in the sale of securities. After turbulent markets and either abuse of legal loopholes or illegal activity, reform legislation followed, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The U.S. Securities and Exchange Commission (SEC) is the federal agency tasked with oversight of the securities industry. The primary means of oversight it uses is requiring publicly traded companies to register with the SEC and disclose relevant information that enables investors to make sound investment choices. The SEC requires publicly held companies to file financial statements certified by independent accounts describing the company’s properties and business, the securities offered for sale and information on the management of the company.
Regulating Financial Advisers And Brokers
Other laws provide protection to investors from negligence or fraud by brokers or financial advisers. Common forms of stockbroker negligence include failing to diversify a portfolio and inadequate supervision of brokers by their managers. Certain forms of stockbroker fraud include selling fake securities or products, making excessive numbers of trades to generate commissions, and paying returns on investments from other investor’s funds.
The most common causes of action involving brokers are misrepresentation and unsuitability. When pursuing a case against a brokerage firm, the venue may be limited based on terms of the contract. These often require clients to resolve claims through arbitration, rather than the courts.
There is no guarantee of making a profit by investing in securities. Many losses happen as a result of legitimate downturns in profits or other factors that impact stock value. However, some losses are the result of fraud, misrepresentation, or deceit on behalf of the company, intermediary brokers or financial advisers.
Obtaining Effective Representation Is Vital
If you believe you are the victim of illegal acts involving your securities investments, it is important that you hire an attorney with adequate background and experience. Handling securities lawsuits from initial filing to settlement negotiations requires a complex set of skills and experience. The Harty Law Group has established a track record of success. Our founding member, Tom Harty, has tried numerous cases to verdict in both state and federal courts. Many of these have been complex commercial or securities lawsuits.
To Learn More, Call Today
If you believe you experienced misrepresentation, deceit or fraud in your securities investing, contact the Philadelphia business lawyers at the Harty Law Group today. We can evaluate your situation and craft an appropriate approach that keeps your goals in mind. Call 267-383-3899 or complete an online form to schedule an initial consultation. With offices located in Philadelphia and Haddonfield, New Jersey, we serve clients throughout Pennsylvania and New Jersey.