Three common types of securities fraud


Securities fraud affects many New Yorkers every year, sometimes leading to the loss of thousands or even millions of dollars. In general, securities fraud involves deceiving investors or manipulating financial markets. The following is an overview of three common types of securities fraud.

1: High yield investment frauds

In this type of scheme, a person will be promised that the investment will have a high rate of return, with minimal or no risks. The investment opportunity may seem “too good to be true” and can involve securities, real estate, precious metals and other types of investments.

In general, the offers for these types of investments are not solicited and can be made by phone, email or in person.

2: Ponzi & Pyramid Schemes

In this type of scheme, a person will collect funds from new investors to pay the high rate of return they told earlier investors they would receive. Ponzi schemes and pyramid schemes hold themselves out as legitimate money-making enterprises. However, in such schemes the investors are the only source of funding.

3: Advance fee schemes

In this type of scheme, a person will advance a small amount of money in hopes of receiving much larger gains. However, these gains are never obtained because there is no underlying investment.

Victims may be told they have to send funds to pay taxes or processing fees, but then the perpetrators of the scheme take the victim’s funds and never deliver returns on the investment.