Common Types of Securities Fraud
A Securities Attorney Can Help You Combat Fraud Matters
Securities laws protect investors from losses suffered due to fraud and promote the efficient allocation of capital and the proper functioning of the economy. For more than 25 years, Glancy Prongay & Murray LLP has tenaciously represented investors in complex securities fraud cases against some of the world’s largest companies. Our firm has recovered billions of dollars for institutional and individual investors. When you work with a securities attorney at GPM, we will help you do the same.
How Our Firm Fights Fraud Claims
The attorneys at Glancy Prongay & Murray are highly experienced in investigating securities fraud schemes and holding those responsible accountable to investors.
We handle securities fraud claims on a contingency fee basis. Our firm assumes all the financial risks of litigation and clients face no up-front or out-of-pocket costs. GPM also offers portfolio monitoring services that help investors to detect securities fraud early and to take prompt action to recover losses.
What to Look for in Securities Fraud Claims
Some common securities fraud schemes that Glancy Prongay & Murray regularly litigates on behalf of our clients include:
- Accounting manipulation. Fraudulent or inaccurate accounting entries in a company’s published financial statements can falsely reflect a healthy company with high earning potential. When the truth is revealed, through a financial restatement or otherwise, investors may suffer steep losses due to the fraud.
- Business metric manipulation. Like standard financial guidance, a company may publish other individualized metrics to inform investors about the company’s business. Manipulation of these metrics is a form of securities fraud.
- Regulatory violations. The Securities and Exchange Commission regulates the securities industry to protect investors from negligent, fraudulent and self-interested conduct. Violation of SEC regulations can be strong evidence in support of a lawsuit’s securities claims.
- Concealment of material business trends. Securities laws require public companies to disclose material business trends to investors. A company’s business trend reporting informs investors about the company’s prospects and helps the markets to accurately price its stock. Concealing relevant information about business trends can mislead investors into investing in underperforming companies.
- False financial guidance. A company that publishes guidance regarding its future earnings which it knows to be false may be liable for securities fraud. Investors who purchase stock in reliance on such guidance are damaged when the company’s true earnings are revealed to the markets.
- Misappropriation of corporate funds. Where insiders such as executives, directors, or advisors steal from a company, the company’s shareholders may have a number of options to protect their investments. Shareholders can sue such insiders derivatively on behalf of the company. In some circumstances the company itself may have committed securities fraud, for example by turning a blind eye to the theft while assuring investors about the company’s internal controls.
- Unfair competition. Unfair competition laws prohibit a company from engaging in deceptive or otherwise wrongful business practices that injure consumers and other businesses. Unfair competition can give rise to securities law claims when the company’s illegal conduct is revealed, damaging the company’s stock price.
- Bribery. A company listed on a United States securities exchange is prohibited from making illicit payments to foreign officials to influence their official actions. Violations of these bribery laws frequently give rise to securities law claims when regulators and the markets learn of the company’s illegal bribery.
- Pyramid schemes. Pyramid schemes, also known as Ponzi schemes, are another common form of securities fraud. These schemes primarily use funds from new investors to pay earlier investors, while misrepresenting that returns are driven by real investing activity.
- Pump and dump schemes. These schemes generally involve individuals making positive false statements about a company to artificially inflate its stock price (the “pump”), and then promptly selling the company’s stock at the artificially high levels (the “dump”). Investors who bought stock at inflated prices are harmed when the truth is revealed and share dumping causes prices to crash.
- REITS-related fraud. Real estate investment trusts (REITS) are specialized investment companies focusing on real estate, which are also subject to securities laws. A REIT that misrepresents its investment strategies or the value of its assets may have committed securities fraud.
- Fund-related fraud. Hedge funds and mutual funds are also subject to the securities laws. A fund that misrepresents its investment strategies or the value of its assets may be liable to harmed investors.
- Insider trading. Securities laws create a level playing field for all investors and protect the integrity of the markets by prohibiting the use of insider information to make trading decisions. Shareholders may be able to recover their losses from company insiders and others who profit from misusing non-public information.
- Broker misconduct. Brokers and financial advisors may be held liable for actions that put their self-interest ahead of their clients, such as excessive trading to create additional broker fees. Brokers and financial advisors may also be held liable for making improper investments with risk levels that are not suitable for their clients.
Contact an Experienced Securities Attorney at Glancy Prongay & Murray LLP
If you have suffered a significant loss on your investment, you may have been the victim of securities fraud. Glancy Prongay & Murray LLP can help you recover damages from the company or individuals responsible for your losses. To learn more, schedule a free consultation with an experienced securities attorney at our firm.