September 29, 2020

What Types of Fraud Should Be Reported to the SEC?

Financial markets and the securities industry as a whole can be quite complex. This often results in fraudsters being able to secretly defraud investors and companies for long periods of time. For this reason, the U.S. Securities and Exchange Commission (SEC) relies heavily on individuals who have knowledge of these schemes to come forward and report their tips

These brave individuals are known as whistleblowers, and if you have information regarding securities fraud, you may be able to report your tip and possibly win an award for your efforts. Below, we go into further detail about the types of fraud the SEC is most interested in investigation so you can be aware of what schemes are not only the most common, but the most damaging.

Insider Trading

Insider trading is one of the most common types of securities fraud that should be reported to the SEC. Here, a stockbroker will make trades, either buying or selling, based on information that was not made available to the public. This can give the stockbroker an advantage over other brokers and result in disastrous losses to the investor. 

Stock Mispricing

Stock mispricing in itself is not illegal, as the financial markets are constantly changing. A mispriced stock can actually result in considerable gains by an investor, which would normally be considered a win. But when a stock is purposely mispriced for a company’s own financial gain with no regard for its investor, stock pricing does become a type of securities fraud.

Misrepresentation

Consider misrepresentation to be lying, which is not only a problem morally, but legally. Misrepresenting the value of a trade or investment opportunity can cause investors to suffer substantial financial losses when the investment tanks. 

Although it is not uncommon to make an investment appear as attractive as possible, when documents have been altered or financial records misrepresented, the SEC needs to be notified. 

Meet with an SEC Whistleblower Lawyer

When you have knowledge of any of the previously mentioned types of fraud, or another type of securities fraud entirely, it may be worth  your while to discuss your information with a reputable SEC whistleblower lawyer at Meissner Associates

We can be reached through the secured submission form at the bottom of this page or by phone at 1-866-764-3100 to schedule your confidential tip evaluation.