Securities Fraud And Consumer Protections
Learn to spot securities fraud before it strikes as well as identifying the best attorney or law firm to handle litigation and lawsuit preparation for you.Securities Fraud Follows The Market
Securities fraud strikes increasing numbers of investors. With markets on the mend following the 2001 technology meltdown, state and federal prosecutors continue to investigate possible securities fraud where hard-charging investment banking firms and their technology clients.
Increasingly, securities fraud lawsuit activity embroils investors and their securities fraud attorney representatives in expensive and costly litigation. Securities fraud victims quickly realize that their rights and recovery of lost money can be best protected by engaging specialist securities fraud law firm professionals, knowledgeable in securities law and regulations as well as experienced in financial litigation matters.
* What Should Investors Do To Avoid Securities Fraud? As an investor, what do you need to do in order to avoid securities fraud? What are the signs, indicators or "smell" associated with securities fraud?
In order to avoid security fraud in a sales pressure environment, simply say no. Security fraud litigation records inevitably show that promoters do not want investors to be properly informed and to carry out normal due diligence, to ask questions, and to carefully weigh up information before investing.
* Watch Out For Stock Hype. Securities fraud attorneys know all too well that the underlying fraud typically depends upon an overly aggressive selling organization which hypes the stock and company unrealistically as regards the likelihood for future performance.
* Watch Out For "You Have Limited Time To Act..". Fraud also emerges consistently in deal situations where the selling organization, broker, or individual claims that "you have limited time in order to invest..so move now or lose your opportunity".
* Be Aware Of Stock Which "Trade Up". Security fraud lawsuit data reflect that "sophisticated" or subtle cases of fraud occur such as when a mature stock starts to "trade up" based on optimistic revenue and growth prospects for the underlying company. Investor beware!
* Even Blue Chip Stocks Can Fool The Market - Lucent 2004. In 2004, amongst the many examples of imputed securities fraud was the case of telecom gear maker, Lucent, a strong and mature company and arguably a blue chip investment candidate for many investors.
Here is where possible securities fraud occurred, according to published SEC settlement findings. According to the SEC, the imputed securities fraud occurred when Lucent posted 20% revenue growth forecasts, which in turn caused a buying frenzy, which rapidly boosted Lucent's share prices and market capitalization.
Just beneath the surface, however, securities fraud lurked in the form of 10 instances of hidden and improper side agreements with customers combining with falsified documents and internal control irregularities.
* Emerging Markets, Start Ups And IPOs. The IPO market has also proved a rich ground for security fraud lawsuit activity on behalf of defrauded victims, both private and institutional.
In the period 2002 to 2004 New York state attorney general Eliot Spitzer prosecuted a number of high flying Wall Street financial services firms, alleging securities fraud based on improper allocations of IPO stock, set aside under "special privileges" arrangements to customers and friends as a form of implicit quid pro quo to obtain investment banking contracts.
Rather than face securities fraud litigation and court room and media embarrassment, many of these same firms "ponied up" hundreds of millions of dollars in settlement monies, without admitting fault .
* Simple Investor Rule - Invest In What You Understand. Securities fraud risk and resulting litigation costs can be minimized if you understand the core business reflected in the security.
The basic rule to avoid becoming a victim of securities fraud is to just say no, if you don't understand the market, the security, or if you haven't had time to conduct proper levels of due diligence.
As attorneys and law firms understand all too well, private placement investment offerings, where individuals or small groups who may know each other, are also rich environs for securities fraud. In most securities fraud lawsuits, alleged blame for the fraud focuses upon improperly constructed formation documents related to raising of the capital.
Securities fraud litigation records also show intentional omissions in key information related to risk assessment. In other cases, securities fraud occurs when the selling agent dismisses information shortfalls, relying instead on his or her firm's "market credibility" as a sales technique to assuage investors of fear.
* Know The Business..Perform Due Diligence..Meet Management. Securities fraud is complex and can be carried within any public or private transaction. Avoiding securities fraud requires investor discipline related to research, as well as demanding answers to key risk issues. A smart strategy to discover the truth in a deal and to avoid becoming a victim of securities fraud is to demand access to the management so that you can meet or discuss fully the nature of the business and your interest and concerns.
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