Common Types of Securities Fraud and How to Recognize Them
Securities fraud involves deceitful practices related to the sale or purchase of securities, such as stocks and bonds, to manipulate the market or deceive investors. These fraudulent activities harm investors and undermine market integrity. Recognizing the different types of securities fraud can help investors protect themselves and avoid significant financial losses. Below, we explore some of the most common forms of securities fraud and how to spot them. Insider Trading Insider trading refers to the illegal practice of buying or selling securities based on non-public, material information about the company. Individuals with access to confidential information, such as executives, directors, or employees, can use that knowledge to make a profit or avoid a loss. The key aspect of insider trading is that the information being used is not available to the public. To spot insider trading, look for unusual trading patterns. If you notice a spike in trading volume or price movements before ...