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What counts as securities fraud?

On Behalf of | Jun 25, 2021 | Criminal Defense |

White-collar crimes in Boulder, Colorado, refer to nonviolent financial crimes characterized by exaggerated claims, omissions and false representations. This type of crime gets its name from the usual offenders, which are government and businesspeople. White-collar crime includes securities fraud, or stock and investment fraud, and it can take many forms.

Ponzi schemes

Ponzi schemes are among the more common white-collar crimes involving securities fraud. Stats show Ponzi schemes cost investors over $3 billion collectively in 2019.

A Ponzi scheme attracts investors by promising them a high profit for an investment at low or zero risk. They give the money to a “portfolio manager” who promises to invest it for them. However, the portfolio manager uses money from new investors to pay old investors, making the scheme seem legitimate.

Advanced fee scams

The advanced fee scam commonly involves scammers contacting potential buyers through email or standard mail, promising them something of more value in return. They ask investors to pay a “finder’s fee” in exchange for their gift or investment source.

For example, the scammer claims the victim won a lottery he or she never entered, but he or she has to pay a fee to secure the winnings. An advanced fee loan scam requires the investor to send a processing fee to secure the loan. However, the victims never see the promised winnings or loans or may get told they don’t qualify.

Late-day trading

Late-day trading involves trading stocks after normal market hours, which places the seller and buyer at an advantage. They make the sale look as though it happened before the market closed.

These schemes commonly include hedge funds and mutual funds traded after 4 p.m., which stalls the net asset value. The net asset value is the price logged at the end of the market day.

Securities fraud commonly carries penalties of up to 20 years in jail and up to $5 million in fines. It is essential the defendant seek legal assistance as soon as possible.

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