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What is securities fraud?

On Behalf of | Feb 21, 2024 | White Collar Crimes

Securities fraud is a complex criminal offense “umbrella” that encompasses various illegal activities aimed at manipulating the stock or commodities markets or otherwise deceiving investors. For individuals who are facing allegations or charges of securities fraud, understanding the nature of these charges, their potential legal implications and the defenses available is crucial.

This can take many forms, including insider trading, misrepresentation of information, stock manipulation and the orchestration of schemes like Ponzi schemes. The basis of these offenses lies in the exploitation of confidential information or the deception of investors.

Legal implications of securities fraud

Regulatory bodies such as the Securities and Exchange Commission (SEC), alongside criminal statutes, enforce laws to combat these practices. The complexity of securities law makes these cases particularly challenging, often involving detailed legal and financial analyses.

The repercussions of being convicted of securities fraud are severe. Penalties can range from substantial fines and the requirement to pay restitution to affected investors to imprisonment. The severity of the punishment often correlates with the amount of money involved, the fraud’s impact on the market or investors and whether the crime is prosecuted at the state or federal level.

Defending against securities fraud charges

Defendants accused of securities fraud have several potential defenses at their disposal. These may include arguing a lack of knowledge about the fraudulent nature of the actions, asserting that the information was not material or demonstrating an absence of intent to defraud.

The complexity of securities fraud cases necessitates legal representation so that defendants can navigate the legal system effectively as possible, develop a strong defense strategy and safeguard their rights as their case evolves. Ideally, defendants will obtain this assistance as early in their case as possible so they can review all the evidence against them and allow that to inform their defensive strategy accordingly.