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Types of Securities & Commodities Fraud

Securities and commodities fraud is becoming increasingly complex and prevalent. Securities fraud is broadly defined and can include misconduct such as insider trading, false or misleading statements in financial reports, theft, ponzi schemes and front running. The SEC specifically warns against the some of the common kinds of securities fraud including:

  • Pyramid Scheme, Ponzi Scheme, or a High-Yield Investment Program
  • Theft or misappropriation of funds or securities
  • Manipulation of a security’s price or volume
  • Insider trading
  • Fraudulent or unregistered securities offering
  • False or misleading statements about a company
  • Abusive naked short selling
  • Bribery of, or improper payments to, foreign officials
  • Fraudulent conduct associated with municipal securities transactions or public pension plans
  • Other fraudulent conduct

The CFTC warns against the following kinds of commodity fraud:

  • Foreign Currency Trading (Forex) –Foreign currency trading or precious metal scams often attract customers via media outlets that peddle high return, low risk investment opportunities or high paid trading employment opportunities.
  • Commodity Pool Operators—Commodity pool operators often solicit investments from different personal sources (friends, neighbors, and co-workers) where in many cases the investments turn out to fraudulent and investors lose their entire investment, similar to outright theft.
  • Introducing Brokers— Introducing brokers often use media outlets to promote commodity futures and options, claiming seasonal trends or well-known events can create opportunity to make big money trading in commodity futures and options with little money down.

The CFTC also warns against the following warning signs of fraud:

  • Get rich quick schemes
  • Guarantees or predictions of large profits
  • Promises no or little financial risk
  • Interbank market trading claims
  • Unsolicited telephone calls
  • People asking you to send cash immediately