If the person that sold them to you knew what you knew, they would not willingly sell them. That's where the fraud comes in.
When you sell shares, you do so on the grounds that the person doing the buying has access to the same information to you and vise-versa. For the whole stock market to work, it has to be that way.
How hard is it to understand that the system requires this kind of honesty to work. It's why it's so heavily monitored and regulated. Unfortunately, the shares business attracts that predatory bastardesque kind of man that will literally sell their morals to the highest bidder.
Without these regulations, in a true unregulated libertarian free market, the largest shark gets bigger and wage slavery becomes a reality once more. I'm all for equality and freedom, but some people simply don't deserve it.