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What is securities fraud?

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For some people, criminal charges can come as an unexpected interruption in their lives. Unlike other types of charges that might be self-evident, allegations of securities fraud can be somewhat more confusing. New York defendants who are facing securities fraud charges and want to know more about these types of allegations should take some of the following into account.

In some instances, securities fraud involves a person making a false statement or claim about a certain company that leads others to make financial decisions. These false statements could be in relation to a company’s stock value or other financial indicators. However, securities fraud can also cover insider trading. When company executives, board members or other people with access to information that is not yet public trade or sell stocks, it is generally considered insider trading.

Securities fraud can be committed by both the company as well as third parties. In the case of a company committing securities fraud, company officials might make inaccurate financial reports to shareholders. The method used by third parties is somewhat different as it does not involve directly misreporting a company’s financial status. Instead, a person might buy up lots of stock in a small company, artificially inflating the price only to sell the stock off for a profit.

What might seem like a good business opportunity could end up being something much more serious. Unfortunately, most people only discover this after they are facing criminal charges for securities fraud. Since these allegations often involve significant amounts of money and potentially steep criminal consequences, seeking guidance from an experienced attorney in as timely a manner as possible is generally a good idea.