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One kind of fraud that you could be accused of participating in is called securities fraud. This form of fraud happens when you make false claims or statements about a company and its stocks. As a result, people may make decisions on that false information.

Insider trading can involve securities fraud, but it is usually different in that the board members, executives or others already know information about stocks and haven’t made that information available to the public. They trade based on what they know, potentially avoiding losses or increasing earnings.

How does securities fraud happen in a business?

Securities fraud can happen when a chief executive officer (CEO) or high-level executive knows information about the company but hasn’t yet informed others about it. The CEO or executive might make financial decisions to help themselves while not informing others, allowing them to suffer losses. For example, if an accountant sees that the company is headed toward bankruptcy and sells his stocks but doesn’t let the company’s board know, that’s securities fraud.

There are some warning signs of securities fraud, like getting information from third parties, but it can be difficult to identify. If you are accused of committing securities fraud, you must be quick to defend yourself. The key to protecting yourself is putting together your defense rapidly so that your attorney has time to review your case before you are arrested or before you’re interviewed. Be honest with your attorney, so they can have the most information to work with and be able to help you with a strong defense suited to your situation.