Security fraud schemes encompass a range of deceptive practices designed to exploit individuals, organizations, or systems for illicit gain. What are the most common types of security fraud schemes that can impact investors?
Phishing attacks, identity theft, Ponzi schemes, credit card fraud, and ransomware attacks are typical examples of investment fraud. You can turn to a Fort Myers securities investment fraud lawyer from our team at Viles & Beckman if you lost money due to any of these common scams.
Call or fill out our online contact form at the first warning signs that you’re dealing with security fraud.
What Are Common Forms of Securities Fraud?
Financial fraud can take many different forms in Florida. Our team handles all types of fraudulent activity seriously, and we can step in to help if you experience losses due to:
Ponzi schemes promise high returns to investors with little or no risk involved. The technique derives its name from Charles Ponzi, an early 20th-century con artist who famously orchestrated this kind of financial fraud.
In a Ponzi scheme, the operator solicits funds from investors, assuring them of substantial profits in a short period. Instead of generating legitimate returns through business activities, the operator uses funds from new investors to pay returns to earlier investors.
These actions create an illusion of success and profitability, enticing more individuals to join and invest. The scheme relies on a constant influx of new funds to sustain itself, as genuine profits do not occur to generate the returns promised to earlier participants.
High Yield Investment Fraud
Another common type of securities fraud involves misuse of high-yield investments. Sometimes, individuals attempt to convince investors to put their money in unregistered investments while promising little to no risk.
Part of this financial fraud may involve the creation of a website that potential investors can visit. Assets involved in this kind of fraud may include:
- Precious metals
- Real estate
Warning signs for high-yield investment fraud may include a lack of credentials on an investment website or promises that seem too good to be true. Staying aware of these risks may help you avoid the effects of fraudulent activity.
Insider trading occurs when individuals use confidential information to buy or sell stocks. This information may allow them to get millions of dollars through fraudulent actions before they get caught. They may also impact stock prices for individuals seeking legitimate investment activities.
Victims of securities fraud involving insider trading can contact our team for help.
Advance Fee Schemes
You may seek legal help if you get caught in an advance fee scheme. This kind of fraud occurs when someone pays an advance fee with the understanding that they will receive funds of higher value in return. Instead, investors generally receive nothing.
Some types of fraud involve third-party misrepresentation. A third party may offer false information to convince individuals to purchase stocks or engage in an investment opportunity. Bad actors dump the stock once the price increases, flooding the market.
You may also hear this action called a pump and dump scheme. Victims of securities fraud can seek help after this action. When you contact us, we can review the warning signs for this kind of fraud.
Some types of securities fraud occur when financial representatives make transactions without obtaining your authorization. Potential victims can check their financial statements and accounts regularly to look for warning signs of unauthorized trading.
Churning (or Excessive Trading)
Perpetrators of securities fraud sometimes engage in churning (or excessive trading). This common fraud scheme requires the perpetrator to make a large number of trades with the goal of generating commissions, not benefiting their clients.
This kind of fraud may also lead to a lot of processing fees, which may represent the first sign of fraudulent activity.
Omissions of Material Fact
Sometimes, scam artists try to convince you to take on investment products by failing to disclose information about the investment’s risks. They may also leave out information about their conflicts of interest while making misleading statements.
Making Unsuitable Recommendations
Victims of securities fraud may have a legal case if their stockbroker presents them with recommendations that do not fit their investment criteria or goals. You can contact us to learn more about this type of scam.
Sometimes, perpetrators of securities fraud engage in misconduct if they concentrate your assets in one area or market sector.
This action can leave you vulnerable to shifts in the market. You can monitor your portfolio regularly to check for signs of fraud or poor decisions by your investment team.
For a free legal consultation, call (239) 334-3933
How Can You Detect Common Types of Securities Fraud?
Identifying different types of fraud quickly can help you minimize the damage faced by thousands of investors. You can monitor suspicious activity in your credit card statement, credit report, or documents received from your financial institution.
It’s essential to monitor your accounts for signs of internet fraud, stock fraud, bank fraud, and other forms of misconduct. You can even set up a fraud alert in some cases. Maintaining a sense of urgency can help you limit the damage caused by these types of fraud.
However, we understand the difficulties inherent in catching financial misconduct and other white-collar crimes. Fortunately, victims of securities fraud can seek immediate help from legal professionals by contacting our team for assistance.
A Security Fraud Lawyer Will Help You With Financial Recovery
What are the most common types of security fraud schemes that can impact investors? Ponzi schemes, churning, and insider trading all represent common types of fraud. If you fall victim to fraudulent schemes, a skilled security fraud lawyer will aid you in pursuing justice.
Our team at Viles & Beckman can help you navigate the intricate legal landscape surrounding financial fraud, offering invaluable guidance. We understand the profound impact securities fraud can have on your life.
Our legal team wants to help reclaim your life. Contact our law firm for a free, no-obligation legal consultation.