Securities Fraud

Securities fraud can involve complex stock trading or small-scale borrowing to start a new business. In many cases, someone charged with securities fraud did not know that what they were doing was illegal. Securities fraud convictions can mean serious jail time and expensive financial penalties. If you are charged with securities fraud, and need advice on your defenses against securities fraud, contact a criminal defense attorney who has experience handling white-collar crimes for help.

What Is Securities Fraud?

Securities fraud involves misrepresentations in buying, selling, or trading stocks or commodities. Securities fraud is a broad term that may involve theft, embezzlement, or theft by false pretenses in stocks, trades, or investments. Securities can include stocks, financial interest in a company, and notes or certificates of interest. Some of the types of securities fraud cases include:

  • Insider trading
  • Ponzi schemes
  • Short-selling schemes
  • Microcap fraud
  • Stock manipulation
  • Financial report fraud
  • Embezzlement by stockbrokers
  • Accounting fraud
  • Internet fraud
  • High yield investment fraud
  • Pyramid schemes
  • Advance fee schemes
  • Foreign currency fraud

Federal Securities Fraud Laws

Securities fraud is a violation of the Securities Exchange Act of 1934 and other federal laws and involves transactions governed by the securities and exchange commission. Securities and commodities fraud involves executing a scheme:

  • To defraud someone as it relates to commodities, securities or options, or
  • To obtain under false pretenses money or property in connection with the purchase or sale of commodities, securities or options

In addition to federal securities fraud, each state may also its own securities fraud offenses. When fraudulent practices involve a local city, county, or state investment, the state may prosecute securities fraud under state law.

Corporate Fraud

Corporate fraud generally involves misrepresentations involving corporate officers and directors. Corporate fraud may involve misrepresenting market information or falsifying accounts to artificially inflate the value of the company. Deceptive accounting can go on for years.

Insider Trading

Insider trading involves making stock trades or security trades based on nonpublic information. Insider trading can involve employees or officers in the company profiting before confidential corporate information goes public and affects the stock price. Insider trading can occur before a large increase or decrease in the stock value. Insider trading can be complex and may be difficult to prosecute.

Ponzi Schemes

A Ponzi scheme is a type of investment fraud where money from new investors is used to pay profits to earlier investors. There may be little to no source of funding other than money from new investors. Similar to a pyramid scheme, a Ponzi scheme can go on for years until it becomes unsustainable and collapses. When a Ponzi scheme falls apart, the operator may disappear with all the investors’ money. The Bernie Madoff investment scandal was one of the largest Ponzi schemes in history.

Criminal Penalties

Securities fraud is a felony offense. Penalties for being convicted of securities fraud can include:

  • Up to 25 years in prison
  • Fines
  • Restitution
  • Asset forfeiture

Alleged securities fraud schemes are often quite complex, taking place over several years involving multiple victims. As a result, a defendant may face multiple securities fraud charges, with each charge carrying the possibility of jail time and fines.

Those accused of securities fraud may also be sued in civil court. Anyone who accuses the defendant of fraud or theft can file a civil lawsuit against the defendant. The penalties in a civil lawsuit are generally limited to monetary damages.

There may also be related charges involved in securities fraud, which also have additional penalties. Depending on the type of fraud, additional criminal charges may include:

Securities Fraud Defense

When someone is accused of securities fraud, they may be facing years in prison. There may be several legal defenses available to someone facing securities fraud criminal charges. Financial gains may have occurred based on a misunderstanding, without any intent to commit fraud. Someone else may have committed fraud and tried to cover it up by making it look like the defendant was involved.

Securities fraud defense cases can be complex, and investigations can take years. Even before any criminal charges are filed, if you suspect you are part of a fraud investigation, make sure you understand your legal rights. Talk to a criminal defense attorney as soon as possible to protect your rights.

Speak to an Experienced Securities Fraud Attorney Today

This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified securities fraud lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local securities fraud attorney to discuss your specific legal situation.

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