During the boom years of the 1990's the stock market and its successes fueled an historic period of prosperity. Average Americans often got into the market via investments made through their retirement accounts. They watched their nest eggs grow with amazement. When the bubble burst, they watched with horror as their savings evaporated.

Of course, economic factors beyond anyone's control contributed to the market's decline. But, as the headlines show us, economics alone are not the only cause of some of the financial losses suffered by both individual and institutional investors. Admissions by companies like Enron, World-Com, and ImClone, and allegations against individuals like Martha Stewart and Jack Grubman indicate that corporate and individual wrong doings contributed to the losses suffered.

To operate as intended, the financial market requires full and fair disclosure relating to corporate operations, financials and all transactions conducted in it. Complex federal laws and regulations, as well as related state laws govern all aspects of the issuance, sale and purchase of stocks and other securities. When federal and state laws and regulations are violated and investors suffer financial losses, they may be able to bring a securities lawsuit.

Securities litigation can be difficult. The agreement an investor has with a broker may place limits on an investor's litigation options. Federal legislation contains strict standards of proof. Accordingly, if you have suffered financial losses because of a securities-based investment and you believe that more than the economy is to blame, it is important that you contact an attorney with experience representing investors to review the circumstance of your individual situation.

Securities Laws

Securities come in a wide variety of forms. Investment vehicles like stocks, mutual funds and bonds all share similar characteristics. As securities, they reflect investments by various individuals and entities in a common enterprise, like a corporation, made with the expectation of deriving a profit. Additionally, as securities, all transactions surrounding these and other related investment tools are controlled by a complex system of federal laws and regulations as well as state statutes.

At the federal level, the Federal Securities Laws control most aspects of the securities industry. The Federal Securities Laws consists of The Securities Act of 1933, which addresses the issuance of securities by companies, and The Securities Exchange Act of 1934, which governs the trading, purchase and sale of securities. These laws also authorize the Securities and Exchange Commission ("SEC"), the federal governmental agency with oversight and control of the industry, to issue further regulatory controls. Additional federal legislation like the Private Securities Litigation Reform Act and the Sarbanes-Oxley Act of 2002 also impact the securities industry and claims related to its practices.

The various federal statutes and regulations that make up the Federal Securities Laws contain specific rules regarding truth and fair dealing in the issuance and sale of covered securities. In addition, most states have their own laws addressing some aspect of securities sales that allow the state's securities commissions to conduct investigations and bring securities fraud actions. Remedies for losses associated with securities also exist under various state and federal common law doctrines.

Common Securities Abuses

The securities industry is complex and each of its players has a distinct set of rules that it must follow. The breach or breaking of those rules usually occurs in predictable patterns depending upon the player's role in the industry.

Company Abuses

Those issuing securities face clear rules about disclosures of information affecting the value of the investment. Securities issuers must file multiple documents with the SEC regarding the value of their company and assets and they must follow Generally Accepted Accounting Principals (GAAP). Individuals within a company may not use knowledge gained from their position to get an unfair advantage over less knowledgeable investors. Failure to follow these and other rules support the following securities litigation claims.

• Insider Trading
  Insider trading occurs when a person with inside knowledge about a company's dealings uses that information to trade stocks. People who may have access to inside information include brokers, stock analysts, investment bankers, and company employees. It is illegal for anyone with inside information to buy or sell stocks based on their unique perspective or special knowledge.
  
  
• Fraud
  Fraud claims against companies frequently occur in relation to their public offerings and the documents filed supporting those offerings. Specific claims may relate to financial statements, initial public offerings, takeovers, and accounting practices.
  
  
• Market Manipulation
  Market manipulation occurs when a company, broker, or individual investor undertakes activity in order to create a false impression regarding a security, its trading activity or price movement, or other, related market information.