Securities Fraud Litigation

Securities fraud (or investment fraud)occurs in connection with the purchase or sale of securities.  First and foremost, a “security” has been broadly defined under the law (i.e., the Securities Act of 1933, Securities Exchange Act of 1934, each as interpreted by the courts) to include almost any interest that can be characterized as a placement of money today for a sum of money in the future.  More specifically, a court will look to see whether the purchasers of the instrument (1) expected profits arising from (2) a common enterprise that (3) depends “solely” for its success on the efforts of others.

Securities fraud, in turn, consists of a material misrepresentation or omission made with the intent to cause reliance by the investor in making the investment decision to transact (i.e., buy or sell), and the investor is justified in relying on that misrepresentation or omission in deciding to transact in a particular security. 

Securities fraud occurs both in connection with public companies that have securities traded on public exchanges such as the New York Stock Exchange or Nasdaq, and in private placements of securities by private companies, promoters, finders or financial advisers. Securities fraud includes outright theft from investors and misstatements on a public company’s financial reports. The term also encompasses a wide range of other actions, including insider trading, front running and other illegal acts on the trading floor of a stock or commodity exchange.  Studies estimate that civil securities fraud totals approximately $40 billion per year.

If you suspect that you have been a victim of securities fraud, please contact Wittenberg Law to discuss your legal rights and options.