Financial Crimes

Securities & Commodities Fraud

Securities and commodities scams and frauds are a serious issue in the US, and the FBI devotes a large number of hours and agents to finding and stopping the criminals who are involved. There are many variations of this type of fraud, including:

Market manipulation

This scam involves the buying and selling of securities that are not trading well. The people who operate this scam will have an interest in a security and begin trading it back and forth internally. The sudden jump in trading generates a great deal of outside interest, thereby manipulating the market to make the security appear to be more valuable than it actually is. Buyers may notice the sudden activity around the security, and decide to make an investment. This allows the security holders are to charge an inflated rate and make extra profit.

Pyramid scams

This is a very common scam that has generated profit for some investors, but lost money for many more. Investors provide money to the creator of the scheme, and then must find new people to make future investments. The originator of the scam never makes an actual investment, and the continuation of income relies solely on the victims finding new investors. The ongoing funding may be used to pay the original investors, but those who give money later are usually left with nothing. In the meantime, the person who started it all keeps most of the money that has been generated by the work of others.

Advance fee frauds

People who are interested in finding a good investment are told about an exciting upcoming opportunity. They are assured that it is a once in a lifetime chance that they do not want to miss. In order to reserve a spot as an investor, they are asked to pay advance fees. After the initial fees are paid, the investors never hear from the people who collected the money again.

Embezzlement

Corrupt Brokers will take money from their clients without authorization and use it to make their own investments. To do this they may create forged documents and signatures so that the transactions appear to be requested by the clients. The victim of this fraud may never even realize what has happened. Brokers will put the money back into their clients account if their investment works out, but in the end they are risking their client's money for their own personal gain.

After hours trading

The market for buying and selling securities has set hours, and when it is closed all trading is supposed to cease. Sometimes, however, traders will buy or sell after hours, which will artificially inflate the going rate for that security the next morning. This is a form of market manipulation, and it will allow traders to illegally make extra profits.

Commodities fraud

Individuals are encouraged to invest in commodities, and after putting in their money they discover that the commodities either never actually existed or that they paid a price which was well over market value. Con artists use forged documents and worthless promises of wealth to encourage people to get make the investment, and then walk away with the money they receive.

The FBI works hard to fight against these frauds and bring the criminals who devise them to justice. In 2007, there were more than 1,200 cases under investigation. Anyone who has been victimized by this type of fraud should contact a local FBI office immediately to report it.