Although there are six Federal statutes that govern securities transactions, securities fraud is primarily defined, prosecuted, and punished under the Securities Act of 1933 and the Securities Exchange Act of 1934. These acts target different markets. The 1933 Act regulates the primary market, and the 1934 Act regulates the secondary market; however, the objectives of the two acts are the same, i.e., to ensure vigorous market competition by mandating full and fair disclosure of all material information in the marketplace. Two main types of fraud may be the basis for securities violations: material misrepresentations, omissions, or both; and insider trading. This article discusses elements of each of these types of securities fraud in detail. The article's section on potential defenses to securities fraud addresses intent-based defenses (lack of fraudulent intent, no knowledge of the substantive rule, good faith, and reliance on advice of counsel); reliance-based defenses (information countering this misrepresentation was readily available or securities issuers could not guarantee predictions made in forward-looking statements); and a defense based on the legitimacy of criminalization. Another section of the article addresses enforcement mechanisms. A discussion of enforcement by the Securities and Exchange Commission (SEC) covers the development of an enforcement action, administrative proceedings, civil remedies, and international enforcement. A discussion of criminal violation considers criminal referrals, parallel or subsequent suits, and contempt proceedings. Penalties provided for securities fraud under Federal law are reported, followed by a review of recent developments related to the law. These pertain to the nature of and response to securities fraud threats via the Internet. 486 notes