posted by on Jan 17
Securities fraud has been a serious issue in the past several years, and securities class action lawsuits have increased dramatically recently. Corporations are bound by law to truthfully and fully report their financial activities, and when they don’t, their stockholders are victims of fraud.
If you have lost money as a result of reporting fraud from a corporation in which you hold stock, then you can become part of one of many securities class action lawsuits happening across the country.
If a corporation misrepresents their financial results or even their expectations, they are committing a crime against the Securities Act of 1933. In 2008, securities class action lawsuits against financial institutions soared. In fact, almost one third of all large financial firms in the country were a named defendant in a securities class action lawsuit that year.
Securities Class Action Lawsuits can be divided into three major types of offenses:
- broker fraud
- shareholder derivative lawsuits
- accounting fraud
Broker Fraud
If a corporation propped up their stock by disseminating false good news or other techniques, or increased optimistic expectations about their stock value, this is broker fraud.
Accounting Fraud
If the company intentionally misleads regulators and/or their shareholders about the financial activities, this is accounting fraud.
Shareholder Derivative Lawsuits
If the company hid important information from shareholders, or if mismanagement caused harm to shareholder’s share value, this is ground for shareholder derivative lawsuits.