Securities Fraud

securities trading

securities trading, financial activity involving transactions of property such as stocks, bonds, commodities, and currency (see securities). Although the trading of stocks and bonds dates back several centuries in many Western nations, the development of the securities industry since World War II has been sweeping. The advent of new technologies, particularly in computers and telecommunications, has brought about a new era in securities trading. Traditional stock exchanges, while still vitally important in major cities around the world, now compete with such over-the-counter trading organizations as the National Association of Securities Dealers Automated Quotations (NASDAQ). NASDAQ and other similar systems allow computerized trading, linking investors with brokers and dealers both on a domestic and an international level. Such systems quote the highest bids and lowest asking prices on all securities, giving investors the opportunity to make optimum deals. In 1986, the London Stock Exchange created a computer-based network similar to NASDAQ with its deregulation move called "Big Bang." It connected London to a group of international securities dealers, making the city's trading floor largely obsolete. In the United States, such over-the-counter trading was at least partially responsible for the problems associated with program trading that arose in the 1980s and the collapse of the stock market in Oct., 1987. These events highlighted the weaknesses of computerized networks like NASDAQ. The 1980s were a decade of unprecedented volume and activity in securities trading because of technological innovation and new financial products. Securities fraud, particularly the insider-trading scandal, became a major issue. Insider trading, or the private trading of securities based on information that has not yet been made public, became an issue in the mid-1980s with the prosecution of such investors as Dennis Levine (1986) and Michael Milken (1988). Many contended that securities fraud of this sort was a result of deregulation of the securities industry since at least the early 1980s, with an attendant relaxation of supervision by the U.S. Securities and Exchange Commission (SEC). The 1990s saw a renewed and accelerated effort by the SEC and other regulatory agencies to regulate the securities industry. In the early 21st cent. regulation once again eased while a number of widely traded financial products relating to securities, such as credit default swaps, remained unregulated; this, in addition to the housing bubble and resulting credit crunch, were widely regarded as contributing to the stock market meltdown in Sept.–Oct., 2008.

See A. Pessin, The Illustrated Encyclopedia of the Securities Industry (1988), M. Torosian, Securities Transfer (1988), and E. F. Fama, Foundations of Finances (1976).

The Columbia Encyclopedia, 6th ed. Copyright© 2014, The Columbia University Press.

Securities Fraud: Selected full-text books and articles

Securities Fraud
Conahan, Joseph; Ivanova, Janine Loaisiga; Nolette, Paul; Young, Aram.
American Criminal Law Review, Vol. 40, No. 2, Spring 2003
Critical Issues in Business Conduct: Legal, Ethical, and Social Challenges for the 1990s
Walter W. Manley II; William A. Shrode.
Quorum Books, 1990
Librarian’s tip: Chap. 12 "Insider Trading and Securities Laws"
Corporate Misconduct: The Legal, Societal, and Management Issues
Margaret P. Spencer; Ronald R. Sims.
Quorum Books, 1995
Librarian’s tip: "The Securities Industry" p. 47
Scientific Investment Analysis
Austin Murphy.
Quorum Books, 2000 (2nd edition)
Librarian’s tip: "Rules Against Securities Fraud" p. 382
Applications in Criminal Analysis: A Sourcebook
Marilyn B. Peterson.
Praeger, 1994
Librarian’s tip: "Investment Fraud" p. 191
The Future for the Global Securities Market: Legal and Regulatory Aspects
Fidelis Oditah.
Clarendon Press, 1996
Librarian’s tip: "Using the Law to Deter and Remedy Fraud" p. 238
Pleading Securities Fraud
Weiss, Elliott J.
Law and Contemporary Problems, Vol. 64, No. 2-3, Spring-Summer 2001
"You've Got Jail": Current Trends in Civil and Criminal Enforcement of Internet Securities Fraud
Walker, Richard H.; Levine, David M.
American Criminal Law Review, Vol. 38, No. 3, Summer 2001
Are Investors Listening When Politicians Speak? Assessing the Securities Fraud Liability of Political Officials Who Manage Large Civic Works Projects
Huang, Jeffrey S.
American Criminal Law Review, Vol. 39, No. 1, Winter 2002
Clintons' Fall Guy May Turn the Tables; the SEC and the IRS Are Investigating Securities and Bank Fraud Allegedly Perpetrated by a Clinton Fund-Raiser Who Says He Is the Victim of a Political Vendetta
Rodriguez, Paul M.
Insight on the News, October 27, 2003
Wall Street: A History: From Its Beginnings to the Fall of Enron
Charles R. Geisst.
Oxford University Press, 2004
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