What is securities fraud?

Securities fraud, also known as stock fraud and investment fraud, is a kind of white collar crime that refers to illegal activity related to the trading of securities in the stock market. This type of crime involves deceptive or deceitful practices in order to benefit from insider trading. In Tennessee, securities fraud occurs when someone misrepresents or “lies” to prospective investors in order to induce them to buy or sell securities. This could take the form of providing false or misleading statements, failing to disclose important information, or manipulating the market price or volume of the securities in order to make profits. Another example of securities fraud is “pump and dump” schemes, in which individuals or groups buy huge amounts of a security, then spread false information about the security’s worth in order to drive up the price. After the price has been artifically inflated, they can then sell the security at a much higher price, resulting in a large profit for the perpetrators. Overall, securities fraud is a serious financial crime that can result in significant losses for investors, as well as legal penalties for the individuals or organizations engaged in this illegal activity. In Tennessee, anyone found guilty of securities fraud can face jail time, hefty fines, and a permanent mark on his or her reputation.

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