Investing in the stock market offers the potential for financial gains but also comes with risks, particularly when fraudulent behavior is involved. In New York, falling victim to securities fraud can leave investors financially compromised, feeling angry, and seeking recourse.
Fortunately, New York has statutes to pursue justice and receive compensation. Here, we provide an overview of New York’s laws regarding securities fraud claims and avenues of legal recourse available to investors who have lost money due to fraudulent investment practices.
Let’s take a look at how to better understand your rights in these situations and how a New York investment fraud lawyer may be able to help you.
Definition of Securities Fraud
Securities fraud, also known as “investment fraud” or “stock fraud,” is a broad term used to describe any type of fraudulent activity involving securities. It can involve:
- Outright theft of funds from investors
- Misrepresentation of investment products and performance
- Market manipulation schemes
- Insider trading
- Many other unethical practices
The state’s Martin Act allows victims of securities fraud to seek damages through a civil lawsuit, and violators may face criminal charges brought by the Attorney General or local district attorneys.
If you believe you’ve been victimized by fraudulent practices, an investment fraud lawyer in New York can help you understand your legal options for recovering compensation.
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New York State Securities Fraud Laws
New York’s Martin Act is the primary statute governing securities fraud. This law was enacted to protect investors from fraudulent practices and provides broad powers to the attorney general to investigate and prosecute securities fraud violations.
The act allows for both civil and criminal action in cases of securities fraud, so victims may pursue a lawsuit, or the attorney general may bring criminal charges against violators.
Types of Securities Fraud in New York
New York is a leader in protecting investors from fraudulent practices, and its securities fraud laws cover a wide range of activities. Common types of securities fraud include insider trading, market manipulation schemes, misrepresentation or omission of material facts regarding investments, unregistered sale or offer of securities, and Ponzi schemes.
Insider trading is a type of securities fraud in which an individual uses non-public information to buy or sell securities for their own benefit. In New York, insider trading is prohibited under both state and federal laws.
The Martin Act specifically prohibits any person from making trades based on material, non-public information related to the security they are trading, as well as providing such information to others for the purpose of trading.
Misleading Statements & False Promises
Misleading statements and false promises are common tactics used by fraudsters to lure in unsuspecting investors. Under New York’s Martin Act, it is illegal for a person or company to make any statement, promise, or forecast regarding the performance of a security that they know or should know is false or misleading.
Unregistered Securities Sale & Offer
Under New York law, it is illegal to offer or sell any security that has not been registered with the state. Companies and individuals seeking to do so must file a registration statement with the Department of Financial Services before engaging in any sales activities.
The registration statement must include detailed information about the issuer, the security being offered, and any related material facts that could influence an investor’s decision to purchase.
A Ponzi scheme is an illegal investment scheme in which investors’ money is used to pay returns to earlier investors rather than being invested in legitimate business activities as promised. Ponzi schemes can take many forms, but all involve fraudulent sales practices and misrepresentation of investments. In New York
Manipulation & Other Fraudulent Practices
New York securities fraud statutes also prohibit other manipulative practices designed to deceive investors. These include
- Wash trades: simultaneous buy and sell orders of the same security by the same person.
- Front running: Placing an order for a security ahead of another customer’s order in order to benefit oneself.
Violators of these provisions may face criminal charges for securities fraud, as well as civil liability under the Martin Act.
Investment Schemes & Pyramid Schemes
Investment schemes and pyramid schemes are both fraudulent activities that rely on deception to take advantage of investors. Investment schemes involve a company or individual offering a non-existent or worthless investment opportunity with the promise of high returns.
Pyramid schemes are similar but instead focus on recruiting new members in order to receive payments from them. Both activities are illegal in New York and can result in criminal prosecution.
Our lawyers are nationwide leaders in investment fraud cases.
How Can an Investment Fraud Attorney Help Me If I Have Been the Victim of Fraud?
Here are some of the key ways a securities fraud lawyer can help if you’ve been a victim:
- Investigation: We will thoroughly investigate your investment, transactions, communications with brokers/advisors, and other relevant documents to build a case.
- Analyze laws/regulations: Determine if securities laws or regulatory rules were broken by the parties involved. Our experienced attorneys understand these complex rules.
- Preserve evidence: Timely preservation of documentation and electronic records is crucial. Securities fraud lawyers know proper protocols.
- Recover losses: Pursue legal avenues for compensating losses from liable parties through arbitration, mediation, or lawsuits.
- Handle regulators: Assist with regulatory complaints and report the matter to the SEC, FINRA, and state agencies for investigation.
- Negotiations: Aggressively negotiate maximum settlements during the resolution process.
- Trial representation: While the majority of cases are handled through arbitration, we will take the case to trial if warranted.
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Contact a Securities Fraud Law Firm ServingNew York Today
If you’ve experienced the frustration and financial hardship of securities fraud, know that help is available. Our securities law firm understands firsthand the emotions involved, and we’re committed to supporting victims through aggressive and knowledgeable representation.
Meyer Wilson is committed to protecting investors’ rights and resolving investment fraud cases to the highest professional standards. For the financial recovery process, we draw on our vast experience and resources.
Our goal is to recover your losses through the strongest available avenues, whether mediation, arbitration, or litigation. Contact our investment fraud attorneys today to get started on your case.
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