Fraud is defined to be "an intentional perversion of truth" or a "false misrepresentation of a matter of fact" which induces another person to "part with some valuable thing belonging to him or to surrender a legal right."

In addition to the traditional criminal definition of fraud, there are many regulatory laws that have very specific rules that must be complied with. If you do not follow these rules to the letter, you could be charged with and convicted of fraud.

Federal Securities Law cover a broad scope of possible types of fraud. Fraud is not limited to the selling of bogus securities. Securities fraud also involves the sale of legitimate securities for illegal purposes. The laws also make "insider trading" illegal. "Insider trading" generally refers to the purchasing or selling of securities of a company while in possession of material information that has not been generally disclosed in the marketplace. (See our Securities Law section for further information.)

(Reviewed 12-08)