Securities Fraud

Securities fraud can involve complex stock trading or small-scale borrowing for a new business. In many cases, someone charged with securities fraud did not know 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, contact a criminal defense attorney with experience handling white-collar crimes.

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. U.S. 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
• Pump-and-dump schemes
• Advance processing fee scams
• 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 violates the Securities Exchange Act of 1934 and other federal laws and involves transactions governed by the Securities and Exchange Commission (SEC). 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, states may have their 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 financial market manipulation or using false information to artificially inflate the company’s value. Deceptive financial statements can continue for years before they are discovered.

Insider Trading

Insider trading involves making stock trades or security trades based on nonpublic, insider 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 form of securities 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.

What Are the Criminal Penalties for Securities Fraud?

Securities fraud is a felony offense. Penalties for being convicted of stock 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 and involving multiple victims. As a result, you may face multiple securities fraud charges, with each charge carrying the possibility of jail time and fines.

You can also be sued in civil court. Anyone who accuses you of fraud or theft can file a civil lawsuit. The penalties in a civil lawsuit are generally limited to money damages.

Related criminal charges may have additional penalties. Depending on the type of fraud, additional criminal charges may include:

• Wire fraud
• Bank fraud
• Telemarketing fraud
• Credit card fraud
• Check fraud
• Insurance fraud

How Can a Securities Fraud Defense Lawyer Help?

You can face years in prison if accused of securities fraud. There may be several legal defenses available for securities fraud criminal charges. Financial gains may have occurred based on a misunderstanding, without any intent to commit fraud. A financial advisor may have committed fraud and tried to cover it up by making it look like you were to blame.

Securities fraud defense cases can be complex, and investigations can take years. If you suspect you are part of a fraud investigation, understand your legal rights. Talk to a criminal defense attorney as soon as possible to protect your rights.