What are the different types of securities fraud?

Securities fraud, also known as investment fraud, occurs when someone manipulates a security such as a stock, bond, or commodity in order to gain an unfair advantage. Securities fraud can involve a wide range of activities, from false statements, insider trading, or market rigging. In California, any person who is found guilty of securities fraud can be subject to civil and criminal penalties, with the potential of jail time and large fines. One of the most common types of securities fraud is insider trading, where a person with inside knowledge of a security or company takes advantage of that information for their own personal gain. It is also illegal for any person to use false or misleading statements to influence the price of a security. This can be done through false advertising, creating false demands for a particular security, or manipulating the news. Another type of securities fraud is known as “pump and dump” schemes, where fraudsters attempt to artificially inflate the price of a security for their own benefit. This type of fraud often involves spreading false or exaggerated information about a company or their products in order to attract more buyers and then abruptly “dumping” stocks once the price is high. Another type of fraud is market manipulation, which occurs through illegal trading strategies such as “front running” or “wash trading.” Front running occurs when a person buys stock before their order influences the market, a form of illegal insider trading. Wash trading occurs when a person trades with themselves to create the illusion of market activity. Finally, pyramid schemes are a form of securities fraud, where individuals or companies sell investments to members of the public, with the promise of high returns for little risk. This type of fraud often involves a chain of investors with the initial investor receiving the majority of the profits. All of these activities are considered securities fraud in California and can result in harsh penalties.

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What are the different types of securities fraud?

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