Watch the YouTube video “What exactly is securities litigation?” for a quick overview of securities litigation law. In simple terms, securities litigation laws deal with legal matters concerning securities. It covers all issues regarding disputes and actions under this term. Securities lawyers specialize in this field of law; investing in a company and buying shares in that company will fall under securities law.
Critical Points in Securities Litigation Law
The government enforces regulations in this industry known as securities regulations. All companies must comply with these regulations.
When there are transgressions, these agencies step in. Let’s look at an example. Let’s say the company ABC sells shares to the public. One day, the CEO discovers a big scandal will break regarding the company and warns their friends and family to sell as many shares as possible. All other shareholders end up losing millions.
These individuals have an unfair advantage, and the SEC may intervene. Or, big companies make waves in the industry to push the value of certain shares up. Before the value of the shares shoots up, critical company members invite their friends to buy as many shares as possible. This is known as insider trading. The SEC may also step in for this case.
This law deals with securities fraud, breach of fiduciary duty, and shareholder derivative actions.