Investment Fraud Glossary


If you were the victim of oil and gas investment fraud or any other type of securities fraud, the investment loss lawyers at Zamansky LLC can provide aggressive legal representation. To help you better understand investment fraud cases, our firm has prepared a glossary of terms that you are likely to encounter when researching your rights as an investor.

  • Affinity fraud: Affinity fraud refers to investment scams which prey on members of specific groups, such as the elderly.
  • Broker: A broker is a licensed financial professional who handles investors’ orders to purchase and sell securities.
  • Brokerage Fraud: Brokerage fraud occurs when a brokerage firm, stock broker, or financial advisor offers biased advice based on a conflict of interest or otherwise provides inappropriate investment advice to customers.
  • Churning: Churning occurs when money managers excessively trade a client’s account in order to generate commissions, often at the expense of profits for the investor.
  • Common Stock: Common stock refers to shares in a corporation which represent partial ownership in the company. Common stock shareholders have voting rights, but in the case of a bankruptcy they will only receive money after the holders of preferred stock are paid.
  • Corporate fraud: Corporate fraud occurs when companies deliberately conceal or skew information by hiding debt, manipulating accounting records, or otherwise misleading shareholders through material misstatements or omissions.
  • Investment fraud: Investment fraud occurs when stockbrokers and/or financial advisors fail to follow the guidelines established by the Securities and Exchange Commission.
  • Master limited partnerships: Master limited partnerships (MLPs) combine the benefits of limited partnerships with the liquidity of publicly-traded companies. MLPs are traded on qualifying exchanges under Section 7704 of the Internal Revenue Code. They must invest the majority of cash in commodities, real estate, or natural resources and will distribute earned money to partners.
  • Ponzi schemes: Ponzi schemes are investment scams in which money from new investors is used to repay existing investors. High returns are promised to investors to entice them to invest but no legitimate profits are made.
  • Sales practice violations: Sales practice violations include violations of the securities laws and regulations applicable to financial advisors and investment professionals in connection with the marketing, offering, or sale of investment products.
  • Securities: Securities refers to both stocks and bonds which can be purchased by investors.
  • Securities fraud: Securities fraud occurs when entities or individuals intentionally provide misleading or deceptive information in an effort to manipulate markets or the share prices of companies.
  • Unsuitability: Unsuitability is a violation of the “Know Your Customer Rule” applicable to financial professionals. When investments are inappropriate for a given investor based on the investor’s risk tolerance and other relevant factors, the unsuitability of the investments can give rise to a damage claim.

The above list outlines just a few of the many terms you may encounter when exploring the laws designed to protect investors. Zamansky LLC can explain all of the laws applicable to your situation and provide the guidance and advice you need to recover your investment losses.