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An Overview of Securities Fraud

On Behalf of | Jul 18, 2022 | Blog, Criminal Defense |

Each year, Colorado residents are scammed out of millions by different types of investment fraud. Securities fraud is one of the most common types of white-collar crime. The Attorney General is tasked with original jurisdiction over securities fraud, or investment fraud, and has been granted authority to aggressively prosecute these crimes. The Securities Fraud Unit of the Office of the Attorney General collaborates with the Colorado Division of Securities and local law enforcement agencies to investigate allegations of securities fraud.

Understanding securities fraud

Securities fraud involves the omission or misrepresentation of information to induce investors into trading securities, or stocks, or investing. This type of fraud violates state laws and laws enforced by the Securities and Exchange Commission. According to the FBI, securities fraud covers a wide variety of illegal activities, including Ponzi schemes, pyramid schemes, and advanced fee schemes. Here, money is collected from the victims, as investors are typically the only source of funding, and gains rarely materialize.

The FBI and securities fraud

The FBI also considers white collar crimes like late-day trading, high yield investment fraud, broker embezzlement, foreign currency fraud, and hedge-fund-related fraud to be different forms of securities fraud. These illegal activities typically rely on deceiving the investor or manipulating financial markets. The FBI actively investigates criminal activity targeting investors and financial markets.

Victims of securities fraud are advised to report the scams to the SEC, state regulators, and local law enforcement agencies. According to the FBI, warning signs of securities fraud include unsolicited investment offers, offers that seem too good to be true, high-pressure sales tactics, and asking for personal information over the phone or the Internet. Generally speaking, good investors are skeptical of all investment offers and check with state and federal regulators to corroborate the financials and investigate past complaints.