Securities Fraud

Kip Schlegel

Securities fraud is a catchall term that includes any violation of the myriad laws governing the issuing, trading, and reporting of securities or their derivatives. In order to understand the nature of securities fraud and the problems inherent in the enforcement of statutes pertaining to the regulation of securities markets, it is important to establish the definition of securities and the development and structure of the markets themselves. The purpose of financial markets in general, and securities markets in particular, is to produce, manage, and structure capital formation. The basic elements of legally obtaining operating expenses are more than 200 years old. Governments and corporations sometimes borrow necessary operating capital by issuing bonds. Because there is no private sector income source that is comparable to taxation, private enterprises are also empowered to raise funds by selling partial corporate ownerships, called shares or stock. The success of financial markets lies in ...

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