In the United States, it is illegal for any company or person to commit fraud in the sale or transfer of a security. If someone commits securities fraud, the individual could face civil penalties forcing them to pay back the money they received illegally. The Securities and Exchange Commission (SEC) may also press criminal charges against the individual.
What Is Securities Fraud?
Securities fraud is defined as knowingly executing or attempting to execute a scheme intended to defraud the public in connection with a commodity and options for future delivery. Additionally, obtaining any money or property that a person knows or should have known was connected to a securities fraud case is illegal. For example, if someone illegally obtains funds through securities fraud and then gifts that money to another person who knows the funds were acquired through securities fraud,
The following things can be considered securities fraud under federal law:
- Theft or embezzlement of client funds
- False statements on financial records relating to securities
- Lying about financial practices or records to auditors
Most criminal offenses are investigated and prosecuted at the state level. On the other hand, securities fraud is considered a federal offense because it relates to an area of regulation of interstate commerce.
The attorneys at George Law Firm can help Michigan residents deal with securities fraud offenses being brought against them. To schedule a free consultation, contact us today at (248) 247-7459 or online.
Penalties For Security Fraud
Under federal law, the maximum sentence upon conviction of security fraud is 25 years in prison. Additionally, the court may require the defendant to pay significant fines and restitution to any investors they defrauded. Anyone convicted of securities fraud will have a felony on their record and will have to deal with that, which will limit their ability to get a job, apartment, or even get into college.
Recent Examples Of Security Fraud
In December 2022, eight individuals were indicted for a $114 million securities fraud scheme orchestrated through a discord social media app. This scheme will likely be dubbed the Atlas securities fraud scheme because their Discord was named Atlas. Using social media sites Discord and Twitter, the individuals allegedly used their social media presence and following to pump particular securities while concealing their intent to dump the shares at inflated prices. The scheme allegedly gained the eight men over $100 million in two years.
The SEC relies on whistleblowers to ensure that individuals or companies committing securities fraud are caught. Those who inform the SEC or help them gain evidence of the schemes are likely to receive immunity, meaning they cannot be charged with criminal offenses related to the crime and may even win an award.
For example, it is alleged that in the Atlas securities fraud scheme, someone was awarded $20 million to provide critical information that will lead to a successful action against those responsible for defrauding so many people.
If you believe that someone is committing securities fraud and want to inform the SEC, it is crucial that you contact an attorney, even if you are not involved. A criminal defense attorney will be able to evaluate the situation and help to avoid potential prosecution for being an accessory to the crime.
In addition, having an attorney present is essential to ensure that no harsh or unfair interrogation tactics are used on you when informing or providing information to the SEC.
Frequently Asked Questions About Securities Fraud
What Are The Elements Of Securities Fraud
Six elements must be proven for someone to be liable for securities fraud:
- Material representation or omission by the defendant
- The knowledge that securities fraud was occurring and the intent to act
- A connection between the misrepresentation and the purchase or sale of a security
- Reliance on the misrepresentation or omission
- An actual economic loss
- A causal connection between economic loss and fraud
Do Anti-Fraud Provisions Apply?
All securities transactions are subject to antifraud provisions, meaning that a company will be liable for securities fraud if they file false or misleading statements. In addition, concerning misleading statements, the government or private parties can bring action against the company under certain securities laws. To understand the various types of securities laws, it is vital to hire an experienced attorney at George Law Firm. To schedule a free consultation, contact us today at (248) 247-7459 or online.
What Actions Constitute Securities Fraud?
Securities fraud covers a variety of activities that involves deceiving or manipulating the market or investors, including but not limited to:
- Manipulating market values
- Misrepresenting financial statements
- Misappropriating funds
- Pump and dump schemes
Hiring A Criminal Defense Attorney
Allegations of securities fraud are extremely serious because they might involve hefty fines and long-term prison sentences. As a result, they need to be taken seriously from the start; the sooner an attorney is involved, the easier developing a defense strategy will be. A Michigan criminal defense attorney will help create a defense strategy to protect your interests. To contact one of our knowledgeable and experienced attorneys, contact us at (248) 247-7459 or online.