10 Facts About Securities fraud

Securities fraud can include outright theft from investors, stock manipulation, misstatements on a public company's financial reports, and lying to corporate auditors.

Microcap Securities fraud includes pump and dump schemes involving boiler rooms and scams on the Internet.

Securities fraud sold in boiler rooms include commodities and private placements as well as microcap stocks, non-existent, or distressed stock and stock supplied by an intermediary at an undisclosed markup.

The largest instance of securities fraud committed by an individual ever is a Ponzi scheme operated by former NASDAQ chairman Bernard Madoff, which caused up to an estimated $64.

Securities fraud is becoming more complex as the industry develops more complicated investment vehicles.

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Recovery of assets from the proceeds of securities fraud is a resource intensive and expensive undertaking because of the cleverness of fraudsters in concealment of assets and money laundering, as well as the tendency of many criminals to be profligate spenders.

Such Securities fraud has been known as watered stock, analogous to the practice of force-feeding livestock great amounts of water to inflate their weight before sale to dealers.

Regulation and prosecution of securities fraud violations is undertaken on a broad front, involving numerous government agencies and self-regulatory organizations.

One method of regulating and restricting a specific type of Securities fraud perpetrated by pump and dump manipulators, is to target the category of stocks most often associated with this scheme.

Securities fraud traded on a national stock exchange, regardless of price, are exempt from regulatory designation as a penny stock, since it is thought that exchange traded securities are less vulnerable to manipulation.