Internet Securities Fraud
What is Internet Securities Fraud?
In general, securities fraud involves the use of false, deceptive, or misleading practices in the securities market. Internet securities fraud, or online security fraud, involves the use of e-mail and websites to carry out various schemes aimed at cheating people out of their investment money.
These newer types of securities violations are increasing in number, and even experienced investors have fallen victim to such scams.
What are Some Common Types of Internet Securities Fraud?
There are many different types of internet securities fraud that are circulating on the web. Some of these include:
- Fictitious Securities: These involve the creation and presentation of “investment opportunities” that don’t exist anywhere besides the internet. They may promise outstanding return rates, and are usually touted as “risk-free investments”. The fictitious securities may appear on a website that appears very genuine, and even contains links to other websites supporting the investment opportunity. As people purchase “shares” of the product, the persons responsible for the websites disappear, leaving the investors with no actual product.
- Fake Stock Tips: These may involve the use of SPAM e-mail to circulate fake tips and “insider” stock information. They may also post false investment advice through online forums, chat rooms, and bulletin boards. As a result, the value of certain stocks may go up, allowing the scammers to reap some profits on their existing stock shares.
- Identity Theft-related Fraud: These are scams that use stock information simply as a front to obtain important, confidential information related to the person’s identification. For example, the scammer may present a fraudulent document in which they obtain the person’s social security number, address, etc.
One of the main characteristics of internet securities fraud operations is that they can often appear very professional in the way that they are presented. For example, the website may contain legitimate-looking documents and photographs related to the investment “opportunity”. Thus, it’s important to exercise caution when researching investment leads online.
What are the Penalties for Internet Securities Fraud?
A victim of online securities fraud normally won’t face legal consequences if they unknowingly participated in a fraudulent investment scheme. However, a party that knowingly participates in internet securities fraud may face legal consequences (for example, if they participated in order to receive a cut of the profit).
Of course, a party that is found to be responsible for an internet securities fraud scheme can face serious criminal consequences. These can include hefty criminal fines, and in some cases, jail or prison sentences. They may also face civil lawsuits from the victims who have suffered economic losses due to the fraud.
In most cases, internet securities fraud is perpetrated by a group of persons, rather than one person acting alone. Thus, it is possible for several persons to be held legally responsible for the damages caused by the internet scheme.
Do I Need a Lawyer if I Have Legal Issues Involving Internet Securities Fraud?
Internet securities fraud has become a major source of litigation in recent years. One of the difficulties in prosecuting fraudsters lies in locating them after the scheme has been accomplished. If you have any legal issues or questions regarding internet securities fraud, you should contact an experienced lawyer immediately. Your attorney can help you compile the necessary documents and evidence for proving your case. You may also consult a lawyer prior to making any investments to make sure that you aren’t being subject to fraudulent practices.
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Last Modified: 06-27-2012 11:12 AM PDT
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