Securities fraud, also known as stock fraud and investment fraud, is a
deceptive practice in the stock or commodities markets that induces
investors to make purchase or sale decisions on the basis of false
information, frequently resulting in losses, in violation of securities
laws. Offers of risky investment opportunities to unsophisticated
investors who are unable to evaluate risk adequately and cannot afford
loss of capital is a central problem.
Securities fraud can also
include outright theft from investors (embezzlement by stockbrokers),
stock manipulation, misstatements on a public company's financial
reports, and lying to corporate auditors. The term encompasses a wide
range of other actions, including insider trading, front running and
other illegal acts on the trading floor of a stock or commodity
exchange.
The Securities Investor Protection Corporation (SIPC)
reports that the Federal Trade Commission, FBI, and state securities
regulators estimate that investment fraud in the United States ranges
from $10--$40 billion annually. Of that number, SIPC estimates that
$1--3 Billion is directly attributable to microcap stock fraud.[17]
Fraudulent schemes perpetrated in the securities and commodities markets
can ultimately have a devastating impact on the viability and operation
of these markets.[34]
Class action securities fraud lawsuits rose 43
percent between 2006 and 2007, according to the Stanford Law School
Securities Class Action Clearinghouse. During 2006 and 2007, securities
fraud class actions were driven by market wide events, such as the 2006
backdating scandal and the 2007 subprime crisis. Securities fraud
lawsuits remained below historical averages.[35]
Some manifestations
of this white collar crime have become more frequent as the Internet
gives criminals greater access to prey. The trading volume in the United
States securities and commodities markets, having grown dramatically in
the 1990s, has led to an increase in fraud and misconduct by investors,
executives, shareholders, and other market participants.
Securities
fraud is becoming more complex as the industry develops more complicated
investment vehicles. In addition, white collar criminals are expanding
the scope of their fraud and are looking outside the United States for
new markets, new investors, and banking secrecy havens to hide unjust
enrichment.
A study conducted by the New York Stock Exchange in the
mid-1990s reveals approximately 51.4 million individuals owned some type
of traded stock, while 200 million individuals owned securities
indirectly. These same financial markets provide the opportunity for
wealth to be obtained and the opportunity for white collar criminals to
take advantage of unwary investors.
Recovery of assets from the
proceeds of securities fraud is a resource intensive and expensive
undertaking because of the cleverness of fraudsters in concealment of
assets and money laundering, as well as the tendency of many criminals
to be profligate spenders. A victim of securities fraud is usually
fortunate to recover any money from the defrauder.
Sometimes the
losses caused by securities fraud are difficult to quantify. For
example, insider trading is believed to raise the cost of capital for
securities issuers, thus decreasing overall economic growth.
http://en.wikipedia.org/wiki/Securiti...
Certainly, It is a fabulous nice and informational website about financial market. It is a very useful for us. So, I like it very much surely. Many many thanks for make this website. If you want more informastion about stock market watch to visit stock market watch The advantage of these stock market watch is they allow for a vast amount of customization by the user. That same advantage can create a disadvantage for some users. Those users may not really know what they are looking for or what data criteria might produce a stock market watch of stocks that present the highest possible probability of a successful stock trade.
ReplyDelete