Is there a criminal penalty for securities fraud?

The Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) investigate allegations of securities fraud. The crime can carry both criminal and civil penalties, resulting in imprisonment and fines.

Which is an example of a risk disclaimer?

Example: Too vague “An investor may get back less than the amount invested. Information on past performance, where given, is not necessarily a guide to future performance.” Or: “The capital value of units in the fund can fluctuate and the price of units can go down as well as up and is not guaranteed.”

Who is the perpetrator of a securities fraud?

What is a ‘Securities Fraud’. The perpetrator of the fraud can be an individual, such as a stockbroker, or an organization, such as a brokerage firm, corporation, or investment bank. Independent individuals might also commit this type of fraud through schemes such as insider trading.

How are advance fees used in securities fraud?

Advance fee schemes can follow a more subtle strategy, where the fraudster convinces their targets to advance them small amounts of money that are promised to result in greater returns. Sometimes the money is requested to cover processing fees and taxes for the funds that allegedly await to be disbursed.

Do you have to disclose financial information to non-accredited investors?

If the issuer sells its securities to non-accredited investors, the issuer must disclose certain information about itself, including its financial statements. If sales are made only to accredited investors, the issuer has discretion as to what to disclose to investors.

Example: Too vague “An investor may get back less than the amount invested. Information on past performance, where given, is not necessarily a guide to future performance.” Or: “The capital value of units in the fund can fluctuate and the price of units can go down as well as up and is not guaranteed.”

The Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) investigate allegations of securities fraud. The crime can carry both criminal and civil penalties, resulting in imprisonment and fines.

What to do if you suspect securities fraud?

Get offers in writing and save a copy for your records. Check with a trusted financial advisor, your broker, or an attorney about any investments you are considering. Don’t be embarrassed. File a complaint with the Securities and Exchange Commission, state securities regulator, or a law enforcement agency.