What is investment fraud?

Investment fraud is a fraudulent activity involving the sale of financial products, such as stocks, bonds, commodities, or other investments. In Texas, investment fraud can take the form of a variety of illegal activities, such as Ponzi schemes, insider trading, and the sale of fictitious or unregistered securities. Ponzi schemes are when a person or company offers to invest money with them, promising high returns in a short amount of time. What really happens, however, is that the fraudsters use money from new investors to pay earlier investors, instead of taking the money and investing it in the promised financial markets. Insider trading is when someone uses confidential information to buy and sell stocks. This is illegal because it gives the person an unfair advantage, as they know what stocks to buy and sell and when. Lastly, unregistered securities are when a company offers an investment that is not registered with the appropriate state or federal agency. The company may use false information to lure potential investors, or may not provide enough information for the investor to make a well-informed decision. In Texas, these forms of fraud are illegal and violators can face both civil and criminal charges. It’s important for investors to be aware of the potential for fraud and to always ensure that any investments they make are with legitimate and registered companies.

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