A securities fraud charge is a serious, potentially life- and career-altering ordeal for any executive or investor. Because the financial market is highly regulated and the definition of securities fraud is so broad, a professional might find himself in hot water under many different circumstances. Securities fraud is a felony offense with harsh penalties. For a securities fraud lawyer in St. Petersburg, call Goldman Wetzel at 727-828-3900.
How does the U.S. government define “securities fraud”?
When the Securities and Exchange Commission (SEC), the federal agency charged with upholding the integrity of investments, receives a complaint about fraud, the agents begin conducting an investigation.
The definition of securities fraud, as provided in 18 U.S.C. § 1348, is fairly broad. The law specifies that someone has committed securities fraud whenever he “knowingly executes, or attempts to execute, a scheme or artifice to defraud any person in connection with any [security]… or to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any [security].”
Meanwhile, Florida Statute § 517.301, defines it similarly, stating that it is illegal to:
- Directly or indirectly use a device or scheme to defraud,
- Use any “untrue statement of a material fact” to acquire money/property
- Take part in any fraudulent or deceitful business practices
Some of the most common types of securities fraud cases involve the following.
- Insider trading
- Brokerage fraud
- Boiler rooms
- Purposefully misinforming clients for personal gain
- Unauthorized trading
- Embezzlement of investment funds
- Corporate fraud
What are the consequences for securities fraud convictions?
During the SEC’s investigation, the agency may freeze the accused’s assets or impose other temporary sanctions until it concludes the investigation and makes a decision about whether the accused committed fraud. If they decide an enforcement action is necessary, the SEC or Department of Justice (DOJ) will initiate it.
The potential penalties for securities fraud convictions are quite stiff and depend on whether you are facing federal or state charges. Under federal law, you may face:
- 25 years in prison
- Heavy fines
- Orders to pay restitution
Under Florida law, securities fraud is a third-degree felony and if a court convicts you, you may face:
- A fine of $5,000
- Five years in prison
Penalties may be higher depending on the amount of funds in question and the number of victims involved. For example, if the defendant allegedly obtained money or property exceeding $50,000 from five or more people, charges increase to a first-degree felony, punishable by up to 30 years imprisonment and up to $10,000 in fines.
A conviction may also mean the end of your career. The civil sanctions and penalties you face if a court convicts you as well as a tarnished professional reputation will be hard to overcome.
How do I defend myself from securities fraud accusations?
There are numerous potential defenses that can negate securities fraud charges. Much depends on the unique details of your case. The sooner your attorney can start working on gathering evidence and crafting a plausible plan of defense, the stronger your case may be. It is especially important to acquire legal counsel during the investigation, before the SEC turns the case over to the DOJ.