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SEC Fraud Defense

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Criminal Securities Fraud Defense Lawyers Handling SEC Investigations Nationwide

While the Securities and Exchange Commission (SEC) frequently pursues fraud charges in administrative and civil proceedings, certain fraud-related allegations can trigger criminal enforcement action by the SEC and the U.S. Department of Justice (DOJ). In these cases, potential penalties for individual offenses include up to 25 years of federal imprisonment plus inordinate fines and restitution liability, and the harm to a company’s or investment advisor’s public reputation can have irreparable consequences.

Nationwide Federal Defense Representation for SEC Fraud Investigations 

For these reasons, if you are being targeted in a criminal SEC fraud investigation, engaging experienced federal defense counsel needs to be your top priority. At Oberheiden, P.C., our federal criminal defense lawyers have centuries of relevant experience for defending clients that are facing SEC scrutiny. In addition to our experience acting as federal defense counsel in SEC and other federal agency investigations across the country, several of our attorneys are former DOJ lawyers who previously oversaw white-collar criminal investigations and prosecuted a broad range of fraud charges on the federal government’s behalf.

SEC Fraud Defense: Potential Allegations, Charges, and Defense Strategies

Common Allegations in Criminal SEC Fraud Investigations

What constitutes criminal securities fraud? If you are under investigation, this is a fundamentally important question. Yet, there is not a straightforward answer. Securities fraud allegations can take many different forms, and defending against fraud-related allegations can require very different approaches under differing scenarios. For example, the following are all common allegations in criminal SEC fraud investigations:

  • Front-running a favorable announcement of material information or the issuance of new securities;
  • Selling securities as a broker-dealer without a valid license;
  • Selling unregistered securities without a valid registration exemption;
  • Churning investors’ accounts in order to generate excessive commissions without regard to the financial impacts for investors;
  • Embezzling funds or securities from corporate or customer accounts;
  • Providing false or misleading information to prospective investors;
  • Omitting material information in public advertisements or SEC filings; 
  • Making unauthorized or unsuitable trades on investors’ portfolios;
  • Insider trading based on material non-public information; and,
  • Corporate reporting and disclosure violations under the Securities and Exchange Act of 1934 and other applicable federal laws.

Oftentimes, SEC fraud investigations will begin as administrative or civil inquiries. The SEC’s Enforcement Division has the authority to directly pursue administrative and civil remedies for each of the offenses listed above (among many others), and administrative and civil proceedings are often more time and cost-efficient for all parties involved. However, administrative and civil inquiries can quickly turn criminal in nature – particularly where the target of the inquiry is not cooperative or appears to be attempting to conceal relevant information – and this means that all types of SEC inquiries need to be treated with equal respect. 

At Oberheiden, P.C., our federal defense lawyers have extensive experience in administrative, civil, and criminal federal enforcement matters, and we can fight to keep your investigation from leading to any type of penalties. If you have been contacted by the SEC, you should not wait to find out that the investigation is criminal in nature before seeking defense representation. If the investigation is administrative or civil in nature, you may still need to execute a strategic defense in order to avoid substantial penalties and to prevent criminal charges from being filed. 

Potential Criminal Charges for Federal Securities Fraud

SEC fraud investigations can result in a variety of federal criminal charges. This includes charges that are specific to securities law compliance, as well as general criminal charges that DOJ prosecutors can file under a broad range of scenarios. For example, in a criminal securities fraud case that involves multiple defendants (which is common), potential charges include:

  • Securities and Commodities Fraud (18 U.S.C. § 1348)
  • Violation of Section 32(a) of the Securities and Exchange Act of 1934 (15 U.S.C. § 77ff(a))
  • Violation of Section 17 of the Securities Act of 1933 (15 U.S.C. § 77q(a))
  • Violation of Section 24 of the Securities Act of 1933 (15 U.S.C. § 77x)
  • Violation of Section 217 of the Investment Advisers Act of 1940 (15 U.S.C. § 80b-17)
  • Violation of Section 49 of the Investment Company Act of 1940 (15 U.S.C. § 80a-48)
  • Violation of Section 325 of the Trust Indenture Act of 1939 (15 U.S.C. § 77yyy)
  • Criminal Conspiracy (18 U.S.C. § 371)
  • Mail Fraud and Wire Fraud (18 U.S.C. §§ 1341 and 1343)
  • Money Laundering (18 U.S.C. § 1956)

In addition, depending on the specific circumstances involved, federal prosecutors may also seek to press charges for crimes such as embezzlement, tax evasion, bank fraud, and even public corruption or bribery. Each of these offenses carries severe penalties, and going to trial on even a single charge can carry the risk of substantial exposure. As a result, when facing an SEC investigation, no aspect of the government’s allegations can be ignored, and corporate and individual targets must be extremely careful to avoid providing the SEC or the DOJ with information that can be used to substantiate criminal charges. 

Defense Strategies for Criminal SEC Fraud Matters

Due to the breadth and complexity of the federal laws that can be used to prosecute cases of criminal securities fraud, defending yourself or your company requires a clear understanding of the specific allegations that underlie the SEC’s or DOJ’s investigation. However, obtaining this information is not a straightforward process; and, even well into the investigative process, it may still be difficult to discern precisely why you or your company is being targeted. 

As your SEC fraud defense counsel, one of our first orders of business will be to communicate with the federal agents who are handling your investigation to determine precisely why you are being targeted. What are the substantive allegations? What is the source of the substantive allegations? Which specific charges are prosecutors pursuing? Is the investigation criminal in nature; and, if so, why? All of these answers are critical to executing an effective defense. 

After quickly gathering the information required to assess your potential exposure, our federal defense attorneys will then transition their efforts to building and executing a defense strategy focused on preventing criminal charges from being filed. Depending on the circumstances at hand, this may involve:

1. Identifying Statutory Deficiencies in the Government’s Case

The extraordinary complexity of our nation’s securities laws means that even SEC agents and federal prosecutors can misinterpret the requirements and prohibitions that apply to individuals and corporate entities. In many cases, apparent securities law violations will not actually rise to the level of establishing civil liability or criminal culpability due to the specific wording of the statute at issue. As your defense counsel, our lawyers will parse the language of the relevant statutes and examine all pertinent case law in order to argue that no enforcement action is warranted. 

2. Asserting Affirmative Defenses

In some cases, a particular activity or course of conduct may be generally prohibited, but statutory safe harbors or other affirmative defenses may nonetheless provide complete defenses to criminal culpability. If you have affirmative defenses available, our attorneys can use them to protect you. Critically, in doing so, we will also ensure that any information disclosed in support of your affirmative defenses does not create exposure to alternate civil or criminal charges. 

3. Asserting Constitutional Protections

In criminal SEC fraud cases, asserting the relevant constitutional protections is fundamental to a comprehensive defense strategy. While the SEC and other federal agencies have significant leeway to conduct investigations in administrative and civil matters, in criminal investigations, constitutional violations can result in evidence being deemed legally inadmissible. If our attorneys can successfully argue that the government’s evidence against you cannot be used in court, then this can provide substantial leverage for negotiating a favorable pre-charge or pre-trial resolution. 

4. Raising Questions about the Sufficiency of the Government’s Evidence

While conclusively establishing that the government does not have a case (or does not have a case it can legally pursue) is one way to avoid prosecution, this is not necessary to avoid a conviction. The federal government has the burden of proof; and, if it cannot meet this burden of proof, then you are not guilty regardless of the underlying circumstances involved. To this end, raising doubts about even a single element of the government’s case (i.e. your subjective “criminal intent”) can be enough to avoid prosecution. 

5. Negotiating for a Favorable Pre-Charge Resolution 

The SEC regularly negotiates settlements in securities fraud enforcement matters. While our first priority will be to avoid liability entirely, if the facts at hand do not support this approach, then our attorneys will work to cultivate the leverage required to negotiate a resolution that protects your finances and keeps you out of federal prison. 

Contact Oberheiden, P.C. about Your SEC Fraud Investigation 

Are you under investigation by the SEC for securities fraud? If so, you need to engage experienced federal defense counsel immediately. To speak with a senior attorney on Oberheiden, P.C.’s federal defense team in confidence, call 888-680-1745 or request a free consultation online now.