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What is Securities Fraud?

Under 18 USC §1348, anyone who knowingly executes a scheme to defraud any person in connection with any security or obtains by false or fraudulent means any money or property related to the purchase or sale of any security shall be guilty of securities fraud.

The federal government is the primary governmental authority responsible for prosecuting securities fraud. The Securities and Exchange Commission (SEC) is the central agency responsible for securities fraud crimes. The agency has five commissioners who are appointed by the President of the United States. The agency enforces federal securities laws, proposes securities rules, and regulates the securities industry. The two main federal laws under which securities fraud cases are prosecuted are the Securities Act of 1933 and the Securities Exchange Act of 1934. To speak with a qualified New York City criminal attorney, call us today.

If you want to learn more about securities fraud, call Lebedin Kofman LLP today at (646) 663-4430 or contact us online. Call now to set up a free consultation with our securities fraud lawyers in New York.

Types of Securities Fraud Offenses

Securities fraud usually occurs when an individual makes a false statement about a company or the value of its stock, and others make financial decisions based on the false information. There are several forms of securities fraud:

  • The first type of securities fraud is securities fraud committed by a company. This occurs when an officer or director of a corporation does not accurately report the company’s financial information to its shareholders. This misinformation may artificially raise the worth of the company and encourage investors to buy shares of an unhealthy company. If the company declares bankruptcy, these investors will lose their investments because of the misinformation provided by the corporation.
  • The second type of securities fraud is insider trading. This occurs when an individual uses confidential financial information about a company to make decisions about whether to buy or sell the stock before the information is disclosed to the public. The third type of securities fraud is third party misrepresentation. This occurs when a third party provides false information about the stock market or a particular company or industry.

For a successful conviction, the prosecution must prove beyond a reasonable doubt that:

  • A defendant willfully engaged in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person, including making an untrue statement;
  • The defendant’s acts must be undertaken in connection with a securities transaction;
  • The defendant must directly or indirectly use the security in connection with the scheme to defraud; and
  • The defendant acted knowingly.

What are the Penalties for Securities Fraud in New York?

A conviction under 18 USC §1348 can have serious consequences. Securities fraud is punishable by up to 25 years in prison. Additionally, securities fraud can involve very high fines depending on the circumstances of the case. Usually, the fines will amount to approximately $250,000, but in certain cases, fines of up to $5 million may been issued. Probation is also a possible penalty for securities fraud, especially when the instance of fraud did not result in any financial loss. Restitution may also be ordered when the securities fraud involves investors, employees, clients, or others who suffered monetary loss as a result of the fraud.

Call (646) 663-4430 or contact us online today to learn more about how we can help you resolve your problems. Our securities fraud lawyers are ready to fight on your behalf.

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