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Securities Fraud Overview

Securities fraud is a white collar crime that involves deceiving investors or manipulating financial markets for the personal financial benefit of the perpetrator of the fraud scheme. At the state level, violation of the Oklahoma Uniform Securities Act may be investigated by the Oklahoma Securities Commission. Federal cases may be investigated by the Federal Bureau of Investigation (FBI) and the United States Securities and Exchange Commission (SEC).

Securities fraud is a broad term that covers a range of illicit activities relating to investments and the stock market. Common schemes and scams include:

  • High Yield Investment Fraud often involves unsolicited investment opportunities that promise high returns with little to no risk. Typically, these offers appear “too good to be true”–and they are.
  • A Ponzi Scheme is a type of investment fraud in which there all returns generated are from the investment funds of later investors. A Ponzi fraudster will promise high returns to early investors, then use the investments of subsequent investors to pay those returns. Initially, the scheme appears to be a legitimate business opportunity, but it inevitably collapses when the perpetrator cannot find enough new investors to continue paying early investors.
  • Advance Fee Schemes offer an exclusive investment opportunity that promises a high rate of return on a relatively small investment. However, to take advantage of the opportunity, investors must first pay a “processing fee” or other advance payment. The perpetrator pockets the fees and disappears.
  • Late Day Trading occurs when a hedge fund buys or sells mutual funds after regular market hours, taking advantage of trading prices that are temporarily suspended and do not reflect the stock’s true worth.
  • Insider Trading occurs when someone privy to confidential information that will affect the price of a stock uses that information to trade on the stock market to his or her own advantage.

Other types of securities and investment fraud include foreign currency fraud, broker embezzlement, and hedge fund fraud. When a person or company is suspected of fraudulent activity concerning investments and the financial market, any criminal investigation is sure to be swift and thorough. Read more about securities commission hearings on the Oklahoma City Legal Group website of attorney J. Patrick Quillian, or submit a confidential case review form.

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