What is securities fraud?

Securities fraud, also known as stock fraud or investment fraud, is a form of financial crime in which investors or the public are deceived through deception or misrepresentation of material facts related to securities transactions. In California, securities fraud is prohibited by laws like the California Corporations Code and the California Business and Professions Code. Securities fraud can take many forms. Examples include insider trading, misappropriation of funds, churning (executing excessive trades to increase commissions), unregistered offerings of securities, unauthorized trading, false advertising, and manipulation of the market. In most cases, the perpetrator tries to profit by manipulating stock prices, misrepresenting the value of a security, exaggerating the safety or profitability of an investment, or creating false market conditions. For victims of securities fraud, recovery of losses can be difficult or impossible. If a victim believes they have been the victim of securities fraud, they should contact their state securities regulator or seek legal advice. Victims may also be able to file a complaint with the U.S. Securities and Exchange Commission or the California Department of Business Oversight, or pursue a civil lawsuit against the person or entity responsible for the fraud.

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What is securities fraud?

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