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Simple English definitions for legal terms
Securities fraud
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A quick definition of Securities fraud:
Securities fraud is when someone lies or doesn't tell the truth about a company's stocks or investments to trick people into buying or selling them. This is against the law and can result in punishment like fines or going to jail. The government has rules to try and stop this from happening, but sometimes people still do it anyway.
A more thorough explanation:
Securities fraud is when someone lies or doesn't tell the truth about a company's financial information to trick people into buying or selling stocks or other investments. This is against the law and can result in criminal charges and fines.
- A CEO of a company lies about how much money the company is making to get people to buy more stock. This is securities fraud because the CEO is not telling the truth about the company's financial information.
- An investment advisor tells their clients to buy a certain stock because they know that the company is going to announce a big merger soon. This is securities fraud because the investment advisor is using insider information to make a profit.
These examples show how securities fraud can happen in different ways. It can be lying about financial information or using insider information to make a profit. Both of these actions are illegal and can result in serious consequences.