Stock Fraud Attorney: Types of Accusations

In the financial realm, a stock fraud attorney represents individuals looking to get back their investments. There are a variety of different ways that investors can be swindled out of their money. While some individuals and companies get away with their crimes, the hand of the law is often able to reach out and gain justice for those affected. Here are a few examples of common security frauds.

Theft From Investors

When people start to notice their money disappearing, you can be sure that they are going to speak up. There are several ways that a person can take investment money under the guise of a legitimate deal. He may set up a dummy corporation. Stocks are sold and by the time an investor realizes what has happened, his money is gone. If someone suspects this is happening or he knows that he is the victim in this type of case, he will seek out representation by a stock fraud attorney.

Inaccurate Company Statements

Falsified financial documents can give investors an inaccurate sense of security. On paper, a company seems sound and it may even look like things are steadily improving. These statements provide the encouragement investors need to put more money into securities. When the truth is revealed, the stocks are worth much less and investors lose considerably.

Insider Trading

When it comes to stock and frauds committed, insider trading is the equivalent of cheating. Someone on the inside of a company obtains information that he or she knows will make a difference in the securities prices. Using this information, people invest and come out on top with the information is made public. Often, a person turns over this information to someone else to let him handle the trades. This detracts attention from the insider. Whether a person is accused of being the insider or using information provided by an insider, they can be the target of a stock fraud attorney and his case.

Ponzi Schemes

A stock fraud attorney may be called on to represent someone accused of putting together a Ponzi scheme. In this scenario, investors hand over their money to a fraudulent investment company. In time, they see returns and assume that everything is going well. What they don't realize is the returns they see are either coming from their own funds or other investors. The investments are not growing. Instead, money is being moved around to make the company look profitable. Eventually, things will collapse and one person walks away with most or all of the cash.