What is securities fraud?

Securities fraud, or investment fraud, is a type of white collar crime that involves misrepresenting information to earn profits through the stock market. It is illegal because it involves lying and deceiving investors to make money illegally. In California, securities fraud is considered a serious crime and carries a significant penalty upon conviction. Securities fraud can take many different forms. For example, a person may use insider information, such as non-public information, in order to get an advantage in stock trading. This is a form of fraud known as insider trading. Another form of securities fraud is when a person lies or misrepresents information in order to induce someone to invest in stocks. This form of fraud is known as "pump and dump". In addition to making false financial statements, another type of securities fraud is when a person manipulates the market by selling stocks short or artificially inflating stock prices. This type of fraud is known as market manipulation. In California, securities fraud is punishable by large fines and possible imprisonment. If convicted of securities fraud, a person may face criminal charges, civil penalties, and/or restitution. It is important for Californians to be aware of the penalties for securities fraud in order to protect themselves and their investments.

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