Stock Fraud

Summary: Stock fraud is problem for many Americans and expatriates around the world. Whilst it may not fit exactly with the nature of this site, it has similarities with Identity theft and fraud - victims lose large amounts of money, it all happens very quickly and they may not be aware for some time, the lost money is very hard to recover and victims feel helpless as they battle to have their funds recovered.

As has always been the way of humanity, where there is money, there are people trying to find a way to grab it easily. The world of investment, therefore, is not all that different from the world of credit cards and loans in this respect...

Types of stock fraud have varied over the years from the more subtle , which were actually a very sophisticated form of hard selling by stockbrokers - though this example also had varying degrees of insider trading and fraud involved as well - to more out and out forms of theft which is normally associated with Mafia type gangs.

Then at a lower level, there are varying degrees of stockbroker incompetence which may or may not be a deliberate attempt to separate an investor from his or her investment money.

In the modern world, with the likes of the Securities and Exchange Commission and the UK Financial Services Authority in fairly firm control, the sort of major losses likely to be made by investors are going to be either accidental and a result of market or stock conditions, or quite deliberate and intended. Thus, the old style stock market manipulator is less prevalent - especially since the scale of many markets means that someone trying to 'corner' the market would need an immense amount of money.

Others that would publish their reasoning behind real - or fake - stock trading signals would have bought or sold in advance of the publication to take advantage of the price movements for risk free profits are also finding the higher levels of monitoring by regulators hard to cope with.

In other words, the world of the investor is becoming safer from the devious wiles of others so that only the swings of the market and poor human performance - in stock selection - are to blame for losses. This, of course, is as it should be.

This leads us to the conclusion that the fraudulent operators existing today must be very sophisticated in order to get away with their crimes. This means that when money disappears to some form of stock fraud, the investor is unlikely to see that money again.

Insider trading cases take a notoriously long time to work their way through the court system. Financial crimes cases are also notoriously difficult for a jury to judge simply because of the complexity of the circumstances. In addition, the complexity and length of the cases usually makes the trials very expensive.

In short, very few juries consisting of "peers" in society are capable of making a solid judgement as to guilt. This means a high financial risk can be associated with bringing a prosecution.

Knowing this, regulators try to plea bargain a conviction, which though may be for a less serious offence, is often more than a prosecutor can realistically expect to achieve. The risk is lowered to the state and the cuplrit is forced to serve some form of punishment.

If, after all that, you really still want to invest, we recommend that you look at this page about the stock market for beginners and this similarly titled page on a different site: The Stock Market For Beginners

To read more about different types of fraud, please also visit the following pages:

Identity Theft Definition

Identity Theft Basics

Bank Identity Theft

Meth Identity Thieves

Identity Theft Tax Fraud

Credit Card Identity Theft