The federal government, through the Securities and Exchange Commission, is the primary governmental authority responsible for prosecuting securities fraud. However, each state also has its own laws on securities fraud and its own state securities commission. While any securities fraud crime might be punishable under either state or federal law, such crimes are often prosecuted as federal crimes.
There is a wide range of what can constitute securities fraud, and these charges can be serious. Contact Philadelphia criminal defense lawyer Brian Zeiger for a free consultation about your securities fraud case.
Common Types of Securities Fraud
Generally, securities fraud occurs when someone makes a false statement about a company or the value of its stock, and others make financial decisions based on false information. Although the crime itself isn’t complicated, securities fraud can be particularly difficult to grasp if you lack an understanding of securities regulation.
Securities Fraud by the Company: The first type of securities fraud occurs when an officer or director of a corporation doesn’t accurately report the company’s financial information to its shareholders. This can artificially raise the worth of the company’s stock and encourage investors to buy shares of an unhealthy company. If the company subsequently goes bankrupt, the people who bought shares based on false information lose their investment completely. One famous example of this type of securities fraud was the Enron scandal.
Insider Trading: Insider trading is another type of securities fraud. It occurs when someone with confidential information about a company’s financial state uses that information to make decisions about whether to buy or sell the stock before that information is disclosed to the public.
Commodities Futures Fraud: The Commodity Futures Trading Commission (CFTC) is the federal government agency that regulates the commodity futures, commodity options, and swaps trading markets. Much of the fraud involves foreign currency trading, precious metals, and commodity pools.
Microcap Fraud: This involves deceptively promoting the stock of relatively small companies to convince the public to buy shares, which are often penny stocks. This type of fraud can also involve “pump and dump” scams, in which fraudsters purchase large quantities of a certain stock and then deceptively incite interest in the stock from other investors. As the stock price rises, they sell—or “dump”—their shares.
Ponzi Scheme: In this type of fraud, investment brokers use new investor funds to pay returns to older investors instead of paying out of actual investment profits. A Ponzi scheme may seem less sophisticated than other types of securities fraud because it is often perpetrated by an individual instead of a corporation or group of conspirators. However, Ponzi schemes can involve the theft of a substantial amount of money. Perhaps the largest securities fraud case in United States history involved a Ponzi scheme that misappropriated more than $64 billion.
Penalties in Securities Fraud Cases
The penalties you may face if you are convicted of securities fraud can vary depending on the circumstances alleged and the amount of money involved. It can also depend on whether you are prosecuted in federal or state criminal court. While most cases are prosecuted on the federal level, with support from the Securities Exchange Commission, some charges are also pursued by state prosecutors and the Pennsylvania Department of Banking and Securities. It is important to have an attorney who not only understands securities offenses but who is also familiar with the court system in which your charges are filed.
The following are some of the possible penalties you may face in a securities fraud case:
- Extensive fines (a federal insider trading conviction could result in a $5 million fine)
- Restitution to repay the alleged victims of the offense
Probation, which has many conditions and is common with smaller or isolated instances of fraud
- Imprisonment, which can last for five or more years per offense charged
Furthermore, if you work in the finance industry and are convicted of any type of securities fraud, it is likely you will be unable to find new employment in that field.
Why Should You Call a Philadelphia Securities Fraud Lawyer?
If you have been charged with—or are currently under investigation for—securities fraud, it is highly advisable that you seek the counsel of an experienced criminal defense attorney. Your attorney will be able to help you in the following ways:
Protect your rights – Securities fraud cases often involve extensive investigation and questioning by law enforcement to unearth these complex schemes. You should always be represented by a skilled criminal defense lawyer during all communications with federal agents or state officers to protect your rights and ensure you do not say anything that may be self-incriminating.
Negotiate a plea bargain – The serious penalties for securities fraud offenses can often be reduced if your attorney knows how to successfully negotiate a plea deal with the prosecutor. In such a deal, you agree to plead guilty in exchange for having some or all of your charges or penalties reduced or dropped. You should always thoroughly discuss with an attorney whether a plea deal is the right decision in your situation.
Represent you at trial – If you do go to trial to fight against wrongful charges, you need a highly skilled criminal litigator on your side. Always ensure your lawyer has extensive trial experience and knows how to aggressively defend against your charges.
Contact Brian Zeiger
When you need a Philadelphia, Pennsylvania attorney to defend you when arrested and charged with a with a white-collar crime, contact Brian Zeiger. It is critical to have an experienced attorney advocating on your behalf. Brian Zeiger is an experienced criminal defense attorney who will vigorously defend your rights.
An experienced criminal defense attorney can help you determine whether you have any grounds for dismissal of the charges, explore plea options, or represent you at trial. Only someone familiar with the criminal court system and cases like yours will know how good your chances are for a favorable outcome. A knowledgeable attorney will take all of this into consideration, assist you in making decisions about your case, and protect your rights.
Contact The Zeiger Firm today at (215) 546-0340 for a consultation, and let us help you.