Fraud stars have benefited much from the internet revolution. Securities scams have become rampart and they have reached epic proportions. Along with the normal precautions, one needs to familiarize oneself about the methods of fraud deterrence in stocks. This has become important part of the syllabus of share business. Millions of dollars are cleverly siphoned off from the gullible investors through clever means.

Beware of the salespersons that have the skill to sell the refrigerators to the Eskimos. Scams do no happen all of a sudden; they do not drop like bolt from the blue. Frauds are planned by extra-intelligent individuals, whose mind works in the wrong direction. As for shares, if some one makes an offer, that has nothing to do with the ground realities, do not be taken in by the sweet conversationalist. Think deeply why he is making such an offer. Such individuals are good psychologists and make maximum advantage of the bone-less tongue. He goads you to take immediate decisions, and would describe the advantage of such an option. The offer generally comes, without your efforts, and the negotiations are carried over the phone. This indicates that someone is targeting you and he has secured authentic information, through unspecified sources. Educate yourself about the tricks employed by such fraudulent persons. It needs to be the part of your investment education. Never give your credit card information and social security number to anyone. Make use of the legal agencies specifically created for the purpose. Many types of federal literature and booklets are available to update the latest trends in such messy operations. Those persons keep on changing their strategies. The State’s Securities Regulator, Federal Trade Commission and the SEC, are at the service of the investors.

Offence is the best form of defense. If you suspect any type of investment irregularities, do not hesitate to take immediate steps to complain to the appropriate law-enforcement agencies. The authorities must have full information about the issue and how the trap was laid. The perpetrators need to be punished as per the provisions of law and laxity on your part will harm the investment fraternity as a whole.

Verify any information about investment conveyed to you over the phone. Some gift attractions may also be tagged on to the proposal. Demand all that is told to you over the phone, through written documents. Every effort will be made so that you take spontaneous, imprudent decisions. In such an eventuality postpone your decision by a day to cross-check the details supplied to you. The temporary demand for a stock may be a deliberate ploy by the scam stars to make huge profits. When the pre-decided period of scam operation is over, stocks begin to under-perform, the prices nose-dive and the investor is left in the lurch.

California has been the granary of stock scams. A series of irregularities related to investment, annuity, malpractices in mutual funds, oil and gas investment schemes took the residents by storm and they lost millions of dollars. The scam stars took full advantage of the legal loopholes and the old fraudulent schemes were offered in new packages. The offers were so tempting that the investors were taken in again and again.

The most important fraud deterrence in stocks is to avail the services for an expert broker for your investment options. Nothing is superior to experience, and the commission that you pay to the broker is sort of a premium for the safety of your investment. A man with good legal and investment knowledge, will act as the strong deterrence in fraud in stocks.

Author: Amit Malhotra

SogoTrade stock broker: Stock investing How Sogotrade offers low commissions: online stocks

Article Source: http://EzineArticles.com/?expert=Amit_Malhotra

The Am Law Litigation Daily: October 17, 2008

Brooklyn US Attorney Benton Campbell says he’s assigned 12 prosecutors to securities-fraud cases and launched a task force dedicated to the subprime fallout. 

America’s Largest Bankruptcies

The 53-count, 65-page indictment covers a broad range of financial crimes, including bank fraud, making false statements to banks and auditors, securities fraud, wire fraud, money laundering, conspiracy and insider trading.

Today in Enron History

Today in 2004, enron broadband services ceo ken rice pleaded guilty to securities fraud. as part of his plea agreement, rice agreed to cooperate with the government in their investigation against other enron executives. 

The Breach Blog: Employee fraud

Beaumont city worker information posted online by mistake. Wednesday, February 04, 2009. Innodata Isogen employee data stolen from car. Wednesday, February 04, 2009. 45 Kansas State students’ information sat exposed since 2001 ….. [Evan] Employee fraud is one of the most difficult breaches to prevent (and sometimes to detect). Most controls are largely administrative in nature such as background checks, segregation of duties and job rotation.

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In recent years, U.S. investors have been plagued by an unprecedented amount of corporate fraud. Irresponsible and illegal actions by Wall Street firms and corporate executives had a catastrophic effect on many individual investors and employees.

Claims by investors against stockbrokers, investment advisors, and financial planners often fall into certain well-recognized categories. Some of the most common investor claims are:

Unsuitable Investment Recommendations - This occurs when a broker or other professional investment advisor intentionally makes decisions that are inconsistent with your individual financial needs. A broker has a legal obligation to make recommendations that are consistent with the client’s risk tolerance, needs, and investment objectives. Thus, the broker has a duty to learn about each client’s personal financial condition and goals, and to recommend investments and trading strategies suitable for that individual. An investment may be unsuitable if:

• A client lacks the financial ability to incur the risk associated with a particular investment.
• The investment was not in line with the client’s financial needs.
• The client did not know or understand the risks associated with certain investments.

Misrepresentations and Omissions - These cases often involve a broker’s failure to inform you of the risks associated with your investments. Stockbroker "misrepresentation" is simply a legal term for stockbroker "lies". At times, these cases arise from "boiler room"operations, in which teams of unscrupulous brokers make large numbers of cold calls and use high-pressure sales tactics. Under the law, even a prediction or opinion offered by an investment broker can be a fraudulent misrepresentation, when it has no reasonable basis. Common lies include claims by brokers that they know the price that a stock will reach, that their own firm controls the stock price, that they have inside information from the company, that profits are "certain", or that they are selling stock to you from a hot public offering. These statements rarely have a reasonable basis and may represent investment broker fraud.

Similarly, a broker has an obligation to tell the whole truth about a potential investment. In other words, the broker cannot promote the positive features of an investment and withhold the negative aspects or risks. Omission of material facts is a form of unlawful misrepresentation. Many types of false or misleading statements can be the basis for a claim, if an individual reasonably relied upon them in making a losing investment.

Excessive Trading or "Churning" - This occurs when a broker engages in excessive trading in your account, to generate larger commissions. When a broker buys and sells securities in your account to generate commissions that seem excessive, there is a strong possibility that your account is being "churned". However, "churning" also includes any trading done to benefit the broker - rather than the investor. Therefore, even one trade may be churning if it has no legitimate purpose for the investor. To establish that a broker churned your account, you must show excessive trading patterns. This can be done with several kinds of evidence, including:

• Calculations to determine the annualized rate of return, which was necessary to cover the commissions charged in your account.
• Number of times that the equity in your account was turned over to purchase securities.
• Purchase and sale trading activity that occurred in your account.

Unauthorized investments - This usually arises when a broker makes trades without your permission. A broker must have the express detailed permission of the client for all trades. This authority only exists when a client signed a written contract in advance, which specifically granted permission to the brokerage firm to make certain trades without prior approval. Absent this type of arrangement, a firm is required to obtain the client’s permission for each transaction. In some cases, the broker simply failed to ask a client for permission to make trades in a nondiscretionary account. In other circumstances, the broker bought stock on margin without authority, or ignored a client’s specific instructions about a discretionary account.Depending on the facts of the particular case, unauthorized trading can result in claims for rescission, breach of contract, or fraud.

Over concentration - This happens when a broker does not diversify your portfolio. One of the most important rules of investing is diversification. When a broker concentrates most or all of your funds in an individual investment or type of investment, then your risk of loss dramatically increases. If a broker did this, and the investments declined significantly, the broker may be liable. For example, if your portfolio was heavily weighted to biotechnology stocks and those stocks dropped sharply, you may have a right to compensation, based on the broker’s failure to diversify your investments and reduce your risk. Handling a stock fraud claim is a complex process. It will take an attorney considerable time and resources to gather all of the documentation, make a determination, and file the appropriate claim on your behalf. It is an undertaking that requires an attorney who is knowledgeable and skilled in working with the complicated laws and procedures that govern these actions, and in evaluating the documentation required to establish the true value of a claim.

Author: Marya Sieminski

Texas State Securities Board

An Inventory of State Securities Board Records at the Texas State Archives, 1933-2005

Merrill Lynch, J.P. Morgan and Others fail to Obtain Dismissal

Merrill Lynch, JP Morgan and Others fail to Obtain Dismissal of IPO Case by Houston Judge :: Stock Broker Fraud Blog. … In Texas, a Houston judge has ruled that a would-be class securities lawsuit filed against JP Morgan Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., and a number of other defendants can move forward. The plaintiffs were investors in Superior Offshore International Inc., a company that collapsed following a failed initial public offering.

Texas State Securities Board Orders Golden Triangle Energy Corp.

Texas State Securities Board Orders Golden Triangle Energy Corp. and Vision Asset Development Co. to Stop Selling Securities.

DON’T GET STUCK By STOCK GYPS

Assistant New York Attorney General Carl Madonick, an expert in the fight against security swindlers, describes it this way: “In a recent case, a Los Angeles promoter induced New York brokers to list fictitious quotations on a stock which then … In a recent case prosecuted by New York Attorney General Louis Lefkowitz, it was found that 4000 persons in the United States and Canada had been sold $1000000 worth of stock in Texas Union Oil Corporation.

Stocks to Watch for Monday, February 9th

Court for the Western District of Texas, San Antonio Division. The main case number is 09-50456. The Company`s non-U.S. operations, which are legally separate, are not included in the Chapter 11 proceedings. Spectrum Brands has received commitments for $235 million in DIP …. investment advisor or licensed stock broker before investing. Information contained in our report will contain "forward looking statements" as defined under Section 27A of the Securities Act of 1933.

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