Securities Fraud

Securities fraud refers to situations in which an individual, securities firm or corporation deceives investors for its own benefit. A recent slew of securities fraud cases have gained national attention, in part because of the large numbers of investors and shareholders who were affected. Most of these cases can be considered either shareholder fraud or investor fraud.

In shareholder fraud cases, a large corporation attempts to maintain the loyalty of shareholders and analysts by falsifying unattractive information — i.e. concealing debts, inflating profits, or moving questionable transactions of the record books. Although the rouse can not be maintained forever, in the short-term, the corporation benefits because shareholders invest more money (or at least don’t pull out). The top executives in large corporations are often the ones accused of committing shareholder fraud or of orchestrating their company’s misrepresentation. Examples of companies that have recently been accused of shareholder fraud include WorldCom and Enron.

Investor fraud cases are those in which brokers, analysts, or brokerage firms dispense skewed information in order to benefits themselves. For example, many securities firms house both investment banking and brokerages. This can lead to a conflict of interest if an analyst gives one of the firms’ investment banking clients an artificially high rating simply because of their business ties. The same can be said about a situation in which a broker gives inappropriately unfavorable ratings to the competitor of one his or her firm’s investment banking clients. This kind of bias can mislead investors, causing them to lose money. Negligence, incompetence, or poor research can contribute to skewed or inaccurate advice as well. All of these situations may constitute fraud. Solomon Smith Barney and Merrill Lynch, among others, have recently been accused of investor fraud.

Mr. Braddock has been one of the leaders in prosecuting against firms and corporations that commit securities fraud. In fact, he was featured on the front page of the The Wall Street Journal for his role in the WorldCom case. His experience, tenacity, and determination can help you recover your lost investment. If you have lost money due to securities fraud, please contact us today!

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