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Securities Fraud Online At A Glance

Securities Fraud Online At A Glance

A number of different tactics can be used online to commit securities fraud. Online fraud can happen when large quantities of SPAM emails are sent out, claiming to have insider trade secrets or tips to investing. These claims are often false or the companies are not legitimate. These serve as ploys to obtain an investor's funds. Another execution of online fraud occurs when a fictitious website claims to have services that can guide investors in the right direction.

 
 
Many times, the website will even follow up with counterfeit (yet realistic looking): documents, sponsors, photos, and other misleading information that would lead the investor to think this is a real practice. Once shares are purchased by the investor, the people behind the scheme tend to disappear with the victim's money.
 
 
Emails can also be distributed that claim to be "investment newsletters". In actuality, the "investment newsletters" are just another type of securities fraud to lure an investor into making a bad purchase. Posting illegitimate advice online (i.e. investment community bulletins, securities investment postings, and investment chat rooms) are also done as a means to commit securities fraud.

What Are Boiler Rooms

What Are Boiler Rooms

Studies show that fraudulent investment operations account for nearly a $1 million a month of financial loss in regards to securities fraud.
 
 
A case that demonstrates boiler room activity took place in July 2003. The scam was perpetrated in Cambodia and twenty people were arrested (two Americans, one Australian, fourteen Britons, one Filipino, one New Zea lander, and one Thai. While performing a search and seizure, investigators claim to have a found a $100,000.00 computer server which was utilized to an illegal international telephone gateway.  Inside the boiler room, they also found a stack of computers and hi-tech hardware. The boiler room scheme was executed by using the equipment to cold-call people internationally to lure victims into fake investment opportunities.
 
 
A full prosecution could not be brought against the criminals because of the lack of laws that existed against boiler rooms and the fraud perpetrated. However, a telephone company did sue them for loss of funds they endured as a result of their illegal phone scam. The amount was over $27,000.00.

Quick Overview To The Pump and Dump Scheme

Quick Overview To The Pump and Dump Scheme

A "pump and dump" scheme can be considered a form of online securities fraud 
The US Securities Exchange Commission (SEC) recommends several ways for the public to steer clear of pump and dump schemes.
 
 
They recommend considering the advertisement source. In other words, if the investment firm advertises online, there is a more of a chance that it is a scam. However, there are some legitimate companies that do advertise online, so it's important to conduct extensive research before making an investment. When researching, it is also important to verify that their claims are accurate.
 
 
It is also important to see where the companies trade their stocks. If they trade with a larger stock exchange (i.e. NASDAQ, the New York Stock Exchange, etc.), it is more likely that their company is legitimate versus a smaller company who trades within the OTC market. The SEC also recommends being wary of "high-pressure" sales pitches. These usually come in the form of advertisements claiming to have a "once in a lifetime" chance or other outrageous claims.

Accountant Fraud At A Glance

Accountant Fraud At A Glance

Accountant fraud (or corporate accounting scandals) often occurs as a result of an accountant not disclosing factual statements to their clients (individuals or businesses) about the state of their finances. This can include overstating finances, understating finances, omitting financial information, etc. This kind of "creative accountant" can often lead to clients and businesses recognizing that something is amiss in their finances which can normally lead to an fraud investigation.
 
 
Many accountant scandals are a direct result of accountants simply pocketing their client's funds and lying to to their clients about where the money is going. In most securities fraud lawsuit cases, the clients are duped into thinking that everything is as it should be when in fact it is not. In reality their finances are actually dwindling due to accountants pocketing their cash.
 
 
In many of these cases, the accountants are actually using their clients funds as a means to live a more wealthier lifestyle than they can actually afford. The clients usually end up losing a significant amount of money as a result of this type of fraud. Many times the amount is significant, due to the trusting relationship the clients develop with their accountant.

Understanding Securities Fraud

Understanding Securities FraudThe Stanford Law School
Securities Classaction Clearinghouse released a study that displayed statistics
regarding securities fraud lawsuits between the years of 2006-2007. The study
showed that the number of securities fraud lawsuits rose approximately 43%
during this time period. Securities fraud (aka stock fraud or investment fraud)
is a scheme that involves luring investors into bad investments based on
falsified information. The end result is typically financial loss for the
investor. The investments are usually either bought or sold based on untrue
facts inside of the stock or commodity market. Often times, the data 
located inside of the SEC (Securities and Exchange Commission) files are often
manipulated or fraudulent. Untrue data may also be found in the company’s
financial statements. Securities fraud also allows for other illegal practices
to be committed by the businesses in question. These crimes may include:
embezzlement, insider trading, and stock manipulation schemes.

There are many different types of securities fraud. These schemes can include:
corporate fraud, securities online
fraudmicrocap fraudaccountant fraudboiler roomsmutual fund fraudpump and dump

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