Securities-Related Crimes (From Criminology Review Yearbook, Volume 2, P 285-300, 1980, by Egon Bittner and Sheldon L Messinger - See NCJ-70397)

• NCJ Number: 70405
• Author(s): A Bequai
• Date Published: 1980
• Length: 16 pages
• Sale Source: Sage Publications, Inc
• Language: English
• Country: United States of America
• Note: Reprinted from White-Collar Crime, 1978, P 17-31

Annotation

The complex nature of securities fraud, which cheats the public of billions of dollars annually, makes law enforcement by the Securities and Exchange Commission and by the industry's self-regulators very difficult.

Abstract

All trading in the securities of publicly-held corporations in the United States takes place in the New York Stock Exchange, the American Stock Exchange, and about a dozen regional exchanges. Over the years national and State legislation was passed to curb abuse; in 1934 the Securities and Exchange Commission was created with authority to enact and enforce necessary rules and regulations in the securities industry. The main issuers of securities (in the form of stocks) are corporations, or legal entities with legal rights and criminal liability separate and distinct from those of the persons who own and manage them. Corporate securities policies are formulated and implemented by management and boards of directors: the company shareholders are usually innocent bystanders and are often the victims of securities fraud. Securities-related crimes include churning (a violation of the Federal securities law involving short-term swings by brokers, who have discretionary powers over their clients' securities and who want to earn huge commissions; trading inside, or nonpublic information, by brokers or corporate executives, for an unfair advantage to their clients and themselves, over the other shareholders of a company; manipulation of stock (when a broker makes false or misleading statements in order to create an artificial demand for a stock; socalled boiler room operations, in which a number of manipulators, using hard-sell tactics and a barrage of false or misleading information, induce members of the uninformed public to invest in unknown companies with dubious or worthless stock; and variations of the socalled Ponzi scheme, involving elaborate swindles based on foreign securities and tax shelters foisted on gullible investors eager for quick, large profits. Forty-eight endnotes, some with bibliographic references, are appended.