Securities Lawsuit

Securities Fraud

Are you retired and living on a fixed income, but a financial advisor invested your money into high-risk investments? If so, you may be the victim of securities fraud, and may be able to file a securities lawsuit against those who have defrauded you.

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Securities are financial instruments that represent financial value, and can be traded on a secondary market. The most common types of securities are stocks, bonds, debentures, notes, and certificates of interest issued by governments and corporations. The term "securities" originated since the credit of the government or the profits and assets of the corporation stand as security for payment.

Securities can be bought from traders who are trained to follow the laws enacted by the Securities and Exchange Commission (SEC) and licensed to buy and sell securities.

Securities Laws

Before 1929, commerce was less regulated. Then the stock market crashed in October 1929. Congress, after numerous hearings, passed the Securities Act of 1933. Congress followed that legislation by passing the Securities Exchange Act of 1934, which established the SEC. It is the nation's main financial regulatory body, which in addition to performing multiple tasks, investigates the allegations of securities fraud along with the National Association of Securities Dealers (NASD).

Since the 1930s, Congress has passed several laws that continue to protect investors from fraudulent activities involving securities. Recent laws that have been passed are the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. These laws ensure that investors have full knowledge based on accurate information regarding the purchase and value of securities.

What is Securities Fraud?

Securities fraud occurs when a financial advisor misrepresents information that investors use to make financial decisions. It is a serious federal crime that is punishable by civil and criminal penalties. The misrepresentation can take many forms, such as acting on or offering inside information, unsuitable recommendations, not disclosing key information, and providing false information.

What types of securities fraud could happen to me?

There are several ways you could be defrauded. If you were advised to buy or sell not based on your financial needs and situation, then you may have been defrauded. Another type of securities fraud is if your financial professional does not diversify your portfolio and concentrates your investments in only one or two investments.

If you have made a decision based on incomplete, inaccurate, or biased information provided by your portfolio manager, you may have been the victim of securities fraud. Another example of securities fraud is if your portfolio manager fails to execute your orders on time. A dishonest financial advisor may also urge you to sell or buy securities to maximize his commission.

What can you do?

Securities fraud may be grounds for filing a lawsuit. While the government regulates commercial practices to ensure the safety of investors' interests, it cannot file a securities lawsuit on behalf of defrauded investors.

If you or someone you know has been the victim of securities fraud, then you should contact Sokolove Law. We will work with you on your case to determine if your losses may be recoverable. Sokolove Law has more than 40 years of experience working on securities fraud cases. Call today for a free initial consultation.


Sokolove Law Team

Contributing Authors

The Sokolove Law Content Team is made up of writers, editors, and journalists. We work with case managers and attorneys to keep site information up to date and accurate. Our site has a wealth of resources available for victims of wrongdoing and their families.

Last modified: November 29, 2021