If you or your business is under investigation by the U.S. Securities and Exchange Commission (SEC) or the Department of Justice for securities fraud, you want to ensure that your rights are not being violated. Federal investigations can be long and taxing ordeals, and a securities fraud conviction may have harsh effects on your future or your business’s future.
What is Securities Fraud?
When a person or company misrepresents information that investors use to make decisions, that person or company is committing securities fraud.
A company might misrepresent information in order to make them more appealing to investors, or even to make them unappealing in other circumstances. Regardless of the reason, misrepresenting that information is a fraudulent action.
There Are Several Different Types of Securities Fraud, Including:
- Accountant fraud
- Corporate misconduct
- Internet fraud
- Insider trading
- Pyramid schemes
What are common violations that might lead to an investigation or charges?
- Insider trading
- Penny stock pump-and-dump schemes
- Manipulation of microcap market to make quick profits
- Misrepresentation to investors
- Providing false information or omitting important information about securities.
- Manipulation of the securities’ market prices
- Theft of funds or securities belonging to a customer
- A broker’s violation of his or her responsibility to treat customers fairly
- The sale of unregistered securities
Who is usually charged with Securities Fraud?
Here are just a few SEC targets:
- Investment brokers
- Stock traders/investors
- Corporate and business executives
- Organizers of investment clubs
- Publicly traded companies that falsify quarterly or annual statements
How does the SEC find out about alleged illegal activity?
The Enforcement Division might receive a tip or complaint from an investor. It also monitors the market for irregularities, or it might discover alleged violations through media reports. The Division may use any number of sources that might prompt an investigation.
Will the SEC investigation end up in court?
The SEC may bring a case to a U.S. District Court to seek a sanction or remedy. But the SEC also may decide to go through an administrative proceeding. Unlike a civil court action, an administrative proceeding is heard by an administrative law judge (someone who is independent of the SEC). The ALJ will hear and consider evidence presented by the staff of the Enforcement Division. You will have a chance to present evidence in your defense.
What are the penalties if I am convicted?
You may have to pay a fine or be asked to return the profits (called disgorgement). You may be ordered to never serve as a corporate officer or director. Other possible sanctions include suspension or revocation of a broker-dealer and investment adviser registration
Do I need an attorney if accused of securities fraud?
Yes. With so much at stake, you will need an experienced lawyer who is well-versed in federal laws and who thoroughly understands the SEC investigations. Pedro Bernal has tried cases in federal and state courts and has resolved complicated legal problems clients.
While handling a case involving the SEC can be tricky, Pedro Bernal knows exactly what is required to prepare a strong defense. He knows how to gather evidence, track down witnesses, reach out to experts who will testify on your behalf and get the results clients need to move on with their lives.