Fraud is one of the most commonly prosecuted federal crimes in the United States, and securities fraud in particular has made headlines for the prosecution of public figures like Charles Ponzi, Bernie Madoff and Martha Stewart. Fraud of any kind carries a lifelong social stigma and in addition to a lengthy prison sentence and considerable fines, a securities fraud conviction can also ruin your career, damage your reputation and destroy your relationships with friends and even family. If you are facing federal charges for securities fraud, do not leave your future and your freedom up to chance. Contact our skilled Orange County criminal defense attorneys at Seyb Law Group as soon as possible to discuss your legal options and begin building a winning defense in your case.

Affordable Securities Fraud Defense Attorney

Federal securities fraud is a serious federal offense resulting in substantial criminal consequences and if you are facing charges for securities fraud, you should not attempt to navigate the federal criminal justice system on your own. Allegations of securities fraud can be brought against private individuals as well as corporations, securities brokers, financial analysts and even government agencies, and no matter what your criminal charges entail, they can follow you for the rest of your life. Federal offenses like securities fraud require immediate intervention by a skilled criminal defense attorney with federal trial experience and a clear understanding of federal criminal law and how it applies to your individual case. At Seyb Law Group, we understand how devastating a federal securities fraud conviction would be for you and your family, and we are committed to representing your best interests in court and helping you get the best possible outcome in your criminal case.

Federal Securities Fraud

The crime of fraud occurs any time a person deceives someone with the intent to cause that person harm, and fraud can take any number of forms, including writing bad checks, stealing someone’s identity, forging documents, submitting false insurance claims or using someone else’s credit card without their permission. The illegal act at the heart of fraud crimes like mail fraud and wire fraud is making false statements, promises or representations with the intent to defraud someone of money or property, and federal securities fraud is no different. Also known as investment fraud or stock fraud, securities fraud is the illegal practice of using manipulative or deceptive tactics in the purchase or sale of a security.

Under federal securities fraud law, the term “security” includes a variety of investments, including investment contracts, municipal bonds, bank notes, corporate stocks, and more, and if a person involved with one of these securities is accused of lying, cheating or stealing in an attempt to gain a financial advantage, he or she may end up facing federal securities fraud charges. Some common types of securities fraud include:

  • Insider trading – This crime occurs when a person associated with a company has confidential information that isn’t available to the public and attempts to profit from this information by buying or selling a security.
  • Misrepresentation – This crime occurs when a person attempts to manipulate the value of a security by knowingly making false statements or representations about the security to others, in order to profit from the anticipated effect of the misrepresentation.
  • Accounting fraud – This crime occurs when an accountant manipulates or falsifies a public company’s financial records to misrepresent its assets and liabilities.
  • Churning – This crime occurs when a securities broker convinces a client to engage in excessive trades in an attempt to profit from additional fees or commissions generated by the trades.

Federal securities fraud charges can be brought against a person who intentionally convinces investors to make sale or purchase decisions about a security on the basis of false or misleading information, or against a person who uses insider information to make sale or purchase decisions about a security for his or her own profit or someone else’s profit. Securities fraud can also include acts of outright theft from investors (embezzlement by stockbrokers), pump-and-dump schemes, abusive short selling, Ponzi schemes, or lying to corporate auditors.

Federal Securities Fraud 18 U.S.C. § 1348

The main federal statute prohibiting securities fraud is 18 U.S.C. § 1348, and this law, patterned after the mail fraud and wire fraud statutes, makes it a federal offense to “defraud any person” in connection with a security or commodity, or to obtain any money or property from the purchase or sale of a security, “by means of false or fraudulent pretenses, representations, or promises.” More specifically, the federal securities fraud law states that it is a crime to “knowingly execute, or attempt to execute, a scheme or artifice –

  • To defraud any person in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)); 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 commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).

It is important to note that under 18 U.S.C. § 1348, you can be charged with and convicted of federal securities fraud even if you didn’t profit from the fraudulent activity. Simply engaging in fraudulent activity with the intent to profit or benefit from it is enough to constitute the crime of securities fraud. Additionally, depending on the manner in which the alleged securities fraud is carried out, you could also face charges of mail fraud or wire fraud, or conspiracy to commit securities fraud, if you are accused of working with at least one other person to commit securities fraud. Other types of fraud crimes that can result in federal charges being filed include healthcare fraud, money laundering, racketeering and tax fraud or tax evasion.

Other federal laws prohibiting insider trading and other forms of federal securities fraud include the Securities Act of 1933, which covers the issuance of securities by companies, and the Securities Exchange Act of 1934, which covers the trading, sale and purchase of securities.

Penalties for a Federal Securities Fraud Conviction

Federal law prohibits the use of any deceptive or manipulative tactics connected to the purchase or sale of a security, under 18 U.S.C. § 1348, and the penalties associated with a federal securities fraud conviction can vary a great deal, depending on the nature of the securities fraud and the specific circumstances of the case. Generally, being convicted of securities fraud means you will face imprisonment in federal prison for five years for each count of securities fraud and payment of a fine based on the value of the securities involved in the fraud. However, the punishment can increase significantly if the alleged crime warrants steeper penalties. For instance, a conviction for insider trading is punishable by a federal prison sentence of up to 20 years and fines of up to $5 million (for individuals) or $25 million (for corporations).

Additionally, because securities fraud often affects multiple people, including investors, clients, employees and others who suffer some sort of financial loss as a result of the fraudulent activity, individuals convicted of securities fraud may also be required to pay restitution to the victim or victims of the fraud. They also stand to lose their job, their professional licensing, and the respect and trust of their friends, colleagues and even family members, which can have devastating consequences lasting for years to come. The statute of limitations for federal securities fraud is six years and under the federal statute for securities fraud offenses, 18 U.S. Code § 3301, it is stated that “No person shall be prosecuted, tried, or punished for a securities fraud offense, unless the indictment is found or the information is instituted within 6 years after the commission of the offense.”

Federal Securities Fraud Defense

Whether it is committed by insider trading, misrepresentation or fraudulent accounting, securities fraud is considered a white-collar crime. The term “white-collar” is used to refer to nonviolent, financially motivated crimes typically committed by business and government professionals by means of deception, rather than force. White-collar crimes tend to be aggressively prosecuted by the federal government and the consequences associated with a white-collar crime conviction can be far-reaching and long-lasting. However, just because you have been charged with securities fraud does not mean you will be found guilty of any wrongdoing. As in any criminal case, when facing securities fraud charges, you are presumed innocent until proven guilty, and the burden of proof lies with the prosecution. That means, in order to convict you of federal securities fraud, the prosecutor in your case will have to prove each element of the crime beyond a reasonable doubt.

Best Defense Strategies in Federal Securities Fraud Cases

There has been a dramatic increase in the enforcement of securities fraud laws and the prosecution of criminal offenses under these laws, particularly with respect to insider trading cases. Being charged with federal securities fraud may feel like the end of the world, but it is important to remember that you still have rights, no matter what criminal offense you are facing, and this includes the right to legal counsel. With the help of a knowledgeable federal criminal defense attorney, you may be able to raise one or more of the following defenses to fight securities fraud charges:

  • No knowledge – You had no knowledge of the securities rule or regulation you are accused of violating
  • Good faith belief – You honestly and in good faith believed that the statements or promises you made were true
  • Illegal search and seizure – The evidence against you was obtained during an illegal search

How Hiring a Securities Fraud Defense Attorney Can Help

While each U.S. state has its own laws concerning securities fraud and its own state securities commission, securities fraud is typically prosecuted as a federal crime and the federal government, in conjunction with the SEC and the FBI, is the primary authority responsible for investigating and prosecuting allegations of securities fraud. Securities fraud is a serious white-collar offense that typically involves lengthy government investigations and complicated facts that require analysis by an experienced criminal defense attorney. To fight securities fraud charges, you need a lawyer in your corner who has a clear understanding of the federal criminal justice system and federal securities fraud law, and who can advise you of the best possible strategy for your criminal defense. Our legal team at Seyb Law Group has earned a reputation for aggressively and skillfully protecting the rights of the criminally accused, and we can ensure that you understand the allegations against you and how best to defend yourself against these allegations.

Contact Our Securities Fraud Defense Attorneys Today

Securities fraud is a complex crime with multiple components that can influence the outcome of a criminal case, and the severity of sentencing for a federal securities fraud offense relies heavily on the specific details of each individual case. Whatever the circumstances of your securities fraud charges, our defense lawyers at Seyb Law Group will advocate for you and use every resource at our disposal to build a solid defense in your case. We believe in giving each of our clients the individualized attention their case deserves, and we will protect your legal rights every step of the way, from the moment you hire our firm to the conclusion of your case, including representing you in court and at trial, if necessary. Any time you are facing criminal charges for federal securities fraud, your freedom, your finances, your reputation and your future are at risk. Consult our federal criminal defense attorneys at Seyb Law Group as soon as possible to schedule your free initial consultation.

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