securities | Definition

Doc's CJ Glossary by Adam J. McKee
Course: Criminal Law

Securities refer to investment contracts, stocks, bonds, and other financial instruments that are regulated by securities laws and subject to criminal prosecution for fraudulent or illegal activities related to their purchase, sale, or exchange.


Securities are financial instruments that represent ownership in a company or entity and can be bought and sold on a regulated market. Securities laws regulate the sale and exchange of these instruments, with the goal of protecting investors from fraudulent or illegal activities. Criminal law can be applied to securities when these laws are violated, such as through insider trading, market manipulation, or other fraudulent practices.

Insider trading occurs when someone uses confidential information to make trades on the stock market, leading to illegal gains or losses for others. Market manipulation involves actions that artificially inflate or deflate the price of securities, such as spreading false information or engaging in coordinated buying or selling. Both of these practices can be considered criminal offenses under securities laws.

Other illegal activities related to securities include Ponzi schemes, where investors are promised high returns, but the money is actually used to pay off earlier investors, and pump-and-dump schemes, where a person artificially inflates the price of a security and then sells it at a profit. These types of activities are also subject to criminal prosecution.

The criminal law applies to activities such as insider trading, market manipulation, Ponzi schemes, and pump-and-dump schemes, which violate securities laws and harm investors.


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Last Modified: 03/14/2023

 

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