Securities Fraud In Depth

What is Securities Fraud?

Securities Fraud is classified as a financial crime fraudulent in nature, which can include a multitude of illegal investment activity varying in both nature and construct. Securities Fraud is regulated by the Security and Exchanges Commission (SEC), which is the governmental agency responsible for all maintenance, operations, and monitoring of activities rooted in securities and investment.

Securities Fraud can be identified by the illegal, unlawful, and unethical properties latent in its respective activities and participation, which can include a variety of monetary expenditures such as stocks, mutual funds, investment advice, and bonds.

What is Insider Trading?

Insider trading is one of the most prominent forms of Securities Fraud, in which individual brokers or investors become privy to information with regards to an investment opportunity that is not made aware to the general public. This type of Securities Fraud typically results in preemptive investment activity resulting from privileged, albeit illegal and unlawful, information on the part of those party to the information in question.

In many cases, an individual involved with a company whose stock is publically traded will share or sell information with regard to an event involving the company in question that is expected to drastically alter the behavior of the company’s stock. This results in opportunities illegally-granted to certain individuals, while kept from the general, investing public.

Securities Fraud Offense Profile

Legal Jurisdiction: Criminal Law, Finance Law, Commercial Law, Business Law

Type of Crime: Typically a Felony

Criminal Code: Varies upon the location of the crime, including the applicable country, nation, state, or province

Range of Punishment(s): Fines, probation, associated penalties, or incarceration – varies upon case details


Applicable Punishment(s): Varies upon individual intent, criminal record, criminal history, and the victim(s) involved. The details of both the number of victims involved, as well as the total amount of loss resulting from the Securities Fraud itself are indicative of punitive recourse.

Securities Fraud Allegations: Terminology and Associated Offenses

The following are commonly associated with charges of Securities Fraud:

White Collar Crime: Typically both financial and non-violent in nature, white collar crime(s) involve individuals displaying prominent social, economic, and financial stature.

Stock Brokers: Individuals who provide investment advice and consultation.

Investment Traders: Individuals granted the expressed permission to represent, as well as invest, on behalf of their clientele.


Hedge Funds: Stocks that are bought and sold in a comparatively brief manner with regard to traditional investments. The notion behind hedge funds incorporates an institution in which market fluctuation and long-term loss can be avoided.


Scam: Fraudulent, criminal activity utilizing misrepresentation and promises of immediate and oftentimes unrealistic returns.


Investment Misrepresentation: The act of falsely reporting or describing an investment. In contrast to a fraud charge with the hope of defrauding investors by misrepresenting the return(s), conditions, and statuses of investment opportunities.


Bucket Shop: A financial brokerage or firm suspected of operations including unethical, illegal, and unlawful investment activities, as well as a vast array of other forms of Securities Fraud.

The Preparation of a Securities Fraud Defense

In the event that an individual has been arrested on a Securities Fraud charge, they are encouraged to observe the behavioral protocol of the arrest process. Individuals are encouraged to consult with attorneys specializing in criminal law and, if possible, those who focus on Finance Law and Investment Law. In the construction of a defense, the individual may be asked to provide the following:

The nature of Securities Fraud in question
The biographical information with regard to any and all victims
The total amount of financial loss incurred by any and all victims
Evidence and witness testimony
A detailed account of the details surrounding the event in question
The inclusion of the name(s) of individuals involved
The arrangement for bail or bond

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