Given how many people depend on securities, such as stocks and bonds, to protect their hard-earned money, several government and non-government organizations monitor and regulate these investments. These agencies provide an abundant amount of information about individual securities. You can use this information to find out more about mutual funds or look up federal commodity trading regulations. Unfortunately, this information is not always easy to understand. FindLaw's Securities Resources section provides links to a wide variety of securities resources to help investors navigate the often-complicated world of stocks, bonds, commodities, and other securities. You can also find a list of some basic terms that every shareholder and investor should know.
An Overview of Securities
Stocks, bonds, and mutual funds are all examples of securities. As securities, they reflect investments made by entities and individuals in a common enterprise, such as a company, with the hope and expectation that the investments will derive a profit. For example, when people buy stock in a company, they are buying a percentage (or share) in the company's profits and assets. As the company makes higher profits, the value of its stock will increase as well. If the "shareholder" is able to sell his or her stocks at a price higher than the purchase price, the shareholder will be able to make a profit.
Securities are governed by both federal laws and state laws, known as "blue sky laws." However, even though the securities industry is heavily regulated, securities fraud continues to occur. If an entity or individual acts a certain way in order to illegally manipulate the investment market, the entity or individual has committed securities fraud. Securities fraud can be committed by financial advisors or analysts, corporations, brokers-dealers, or even private investors. There are a variety of actions that a person or entity can perform that constitute securities fraud. Just a few examples include hiding or distorting company information, acting on inside information, or purposefully offering poor investment advice.
Securities Class Actions
If a group of investors lose investment money as a result of securities laws violations, they have the option of bringing a securities class action suit against the violator. These cases often arise from instances in which the investors believe they were given false and misleading statements about a company that caused the company's stock to be traded at higher prices that it would have otherwise been traded. When investors have the same claims, it's usually more efficient for investors to pursue their claims as part of a class instead of individually. This is especially true for small shareholders because it gives them more of an equal playing field against large, well-funded corporations. A class action lawsuit allows individuals to seek recovery without each individual having to hire an attorney and incur legal fees. A class action can typically take anywhere from one to four years. However, this is only a general estimate because if the class action is brought to trial and followed by appeals, it can last much longer.
Hiring a Securities Lawyer
If you or someone close to has lost investment money, and you believe that it was the result of investment or securities fraud, you may want to contact a securities attorney to discuss your legal options.