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Securities Fraud Defense Lawyers

Under 18 U.S.C. ยง 1348, Securities and Commodities Fraud are punishable by imprisonment of up to 25 years.

Oberheiden, P.C. is a national criminal defense firm that represents clients facing serious allegations of securities fraud and other state and federal white-collar crimes.

Securities Fraud Explained

Stockbrokers, financial advisors, market analysts, and other professionals operating in the securities market are subject to strict regulations policed by the Securities and Exchange Commission (SEC) and other federal authorities. With the constantly-changing regulatory landscape, brokers, advisors, and others need to be extremely sensitive to their legal obligations. In light of numerous high-profile frauds perpetrated since the turn of the century, even simple oversights can lead to serious criminal charges.

At the Oberheiden, P.C., we represent individual and corporate clients nationwide in securities fraud investigations and criminal trials. We handle cases involving these and other allegations:

  • Front Running. Front running is the practice of buying securities just before a brokerage announces a favorable recommendation or buys a large block of shares. Using inside information for personal gain in this manner is prohibited by federal law.
  • Selling Securities Without a License. The United States securities market is tightly regulated, and all individuals who sell securities must be registered with the SEC. Selling securities without a valid license may constitute a serious federal offense.
  • Selling Unregistered Securities. With very limited exceptions, securities offered to the public must be registered with the SEC. The sale of unregistered securities constitutes fraud and is a violation of federal law.
  • Account Churning. Churning is the practice of making an excessive number of trades in order to generate commissions. As a broker or financial advisor, you must put your client’s interests first. Using clients’ funds to generate commissions is a surefire way to draw the attention of federal authorities.
  • Embezzlement. When you take money from an investor or a corporate account, you may be facing securities fraud and other criminal charges.
  • Providing False Information to Buyers or Sellers. You can also face charges for securities fraud if you misrepresent market projections, the value of a stock, the level of risk involved in a particular investment, or any other material information.
  • Making Unauthorized Trades and Unsuitable Investments. If you make trades without an investor’s authorization, or if you make trades that do not align with their investment objectives, you may face charges for securities fraud. Even if you are managing a discretionary account that allows you to make certain investment decisions for your clients you can still be held civilly and criminally liable for making unsuitable and other fraudulent trades.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Joe Brown
Joe Brown

Former U.S. Attorney
& Former District Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney

Partner

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

We also represent corporate officers and employees accused of securities fraud. Two of the most common situations we see involve insider trading and issues around corporate reporting and public disclosures:

Insider Trading

As an employee or officer of a publicly-traded company, you may have access to inside information that is not available to the general public. While it can be tempting to use this information to opportunistically buy or sell your company’s stock before the news hits the market, doing so can be a big mistake. This is known as insider trading and is strictly prohibited by U.S. federal securities laws. Violators can face up to 20 years in prison and $5 million in fines (or up to $25 million for corporate defendants) for a single offense.

Corporate Reporting and Disclosure Violations

Corporate insiders are also prohibited from disseminating false information in order to pump up their company’s stock value or prevent major stock market losses. Examples of prohibited practices include:

  • Making false accounting entries
  • Making false statements to the company’s auditors
  • Publishing inaccurate press releases and distributing other false information
  • Filing inaccurate quarterly or annual reports
  • Promising exaggerated returns on investments
  • Committing violations of the Foreign Corrupt Practices Act and other federal laws

Defending Against Securities Fraud Charges

Our experienced SEC defense lawyers and former federal prosecutors have years of experience representing individuals and corporations that are under investigation or facing charges for federal crimes. We work with FBI agents, CPAs, forensic fraud examiners, and former federal prosecutors that are intimately familiar with the arguments, resources, and strategies that the government uses to prosecute claims for securities law violations. When you hire Oberheiden, P.C., you can count on our extensive knowledge and deep insights to develop the strongest possible defense to your criminal charges.

Penalties for Securities Fraud

Securities and Commodities Fraud is punishable by imprisonment of up to 25 years.

Q&A with SEC Defense Attorney Nick Oberheiden, PhD

Q: Does the SEC prosecute criminal cases?


No, not directly. While the SEC, and, more specifically, its Division of Enforcement, have the authority to conduct investigations and pursue civil and administrative enforcement actions with the Commissioner’s approval, the SEC does not prosecute criminal cases directly. However, it can refer investigations to the U.S. Department of Justice (DOJ) in appropriate cases, and the DOJ routinely pursues criminal charges for securities fraud and related offenses arising out of SEC investigations.


Q: Why am I being investigated by the SEC?


There are a number of different issues that can trigger an investigation by the SEC’s Division of Enforcement.


In many cases, investigations will result from complaints filed by investors, current or former employees, and competitors. While these may take the form of formal whistleblower complaints, they can also take the form of informal complaints lodged with the Division of Enforcement. If Division staff believe that the allegations set forth in the complaint are credible, then they may choose to open an investigation to examine the matter further.


SEC investigations can also be triggered by reviews of brokerage firms’ and companies’ public filings, by media reports, and by various other sources. As your firm’s or company’s securities fraud defense counsel, we will use our resources and rely on our experience to quickly determine what triggered your investigation.


Q: If I am under investigation by the SEC, does this mean that I am only facing possible charges for securities-related offenses?


No, and this is extremely important. While the SEC focuses its enforcement efforts on the Securities Act of 1933, the Securities Exchange Act of 1934, and the various other laws and regulations that regulate the sale of securities in the United States, it regularly works in concert with other agencies to execute large-scale criminal investigations. This includes agencies such as the DOJ, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS).


As a result, when facing an SEC investigation, it is imperative to critically assess all potential vulnerabilities. Could the IRS substantiate charges for criminal tax evasion? Even if the SEC cannot prove securities fraud, could the DOJ prosecute for mail fraud or wire fraud? These are questions you need to answer and quickly and answering them requires the advice and representation of experienced federal defense counsel.


Q: What are possible defense strategies in securities fraud cases?


Focusing on federal securities fraud specifically, there are a number of potential defense strategies that can be utilized to avoid criminal prosecution, or, if necessary, criminal sentencing at trial. The specific strategies that are available will depend on the specific charges at issue, as, for example, defending a brokerage firm against churning allegations is very different from defending corporate executives against allegations of insider trading.


That said, generally speaking, a key defense strategy in many securities fraud cases involves challenging the sufficiency of the government’s evidence. Securities fraud cases tend to be extraordinarily complex, and the government has the burden of establishing guilt beyond a reasonable doubt. This means that, in order to avoid prosecution, you do not need to prove that you are innocent. Rather, all that is necessary is to convince the prosecution that it does not have the evidence it needs to fully prove its case in court.


There is various specific affirmative, statutory, common law, and constitutional defenses to criminal securities fraud charges as well. At Oberheiden P.C., our SEC defense lawyers are skilled at effectively presenting all defenses our clients have available. This includes presenting defenses during the investigative process, in grand jury and pre-trial proceedings, and in federal district court.


Q: If I am not criminally culpable, could I still face civil or administrative penalties?


Potentially, yes, although the answer to this question depends on the current status of your case. At the investigative stage, a key defense strategy often involves working to keep the investigation civil or administrative in nature, as this keeps the risks of criminal prosecution off of the table. Of course, if you haven’t done anything wrong, then this is not a strategy we would pursue.


At the same time, the standard for liability in civil and administrative matters is much lower than it is for criminal culpability. As a result, when defending against securities fraud allegations, it is absolutely essential to make sure that you are not volunteering any information that could ultimately be used to establish some form of liability. Additionally, the SEC can initiate civil or administrative proceedings in tandem with criminal prosecution by the DOJ, so it may be necessary to defend yourself (or your brokerage or company) on multiple fronts in order to completely avoid federal penalties.


Q: What Types of Investment Assets are Covered Under Securities Fraud?


Securities fraud covers all types of investment assets. If an investment asset qualifies as a security, then illegal activity related to the purchase, sale, or recommendation of the asset can be prosecuted as securities fraud. This includes both debt securities and equity securities, which the SEC defines as:


“Any stock or similar security, certificate of interest or participation in any profit sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture, or certificate of interest in a business trust; any security future on any such security; or any security convertible, with or without consideration into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle, or other option or privilege of buying such a security from or selling such a security to another without being bound to do so.”


Thus, while many securities fraud cases focus on trading in corporate stocks, the definition of securities fraud is much broader than this. Corporations, corporate insiders, broker-dealers, investors, and other entities and individuals can face SEC investigations involving all types of securities—and the SEC regularly pursues investigations beyond the markets for exchange-traded and over-the-counter stocks.


Q: What Are the Elements of Securities Fraud?


To prove securities fraud, federal prosecutors generally must establish six key elements. These elements are: (i) a material misrepresentation or omission, (ii) a transaction related to the material misrepresentation or omission, (iii) knowledge of the illegal conduct, (iv) third-party detrimental reliance, (v) economic loss, and (vi) causation linked to the third-party’s reliance. However, while these are the basic elements of a federal securities fraud case, securities fraud can take many different forms; and, some specific forms of securities fraud (i.e., insider trading) involve different elements of proof.


Q: What Agencies Investigate Securities Fraud?


The SEC is the federal agency that is primarily responsible for investigating securities fraud. However, the Federal Bureau of Investigation (FBI) has jurisdiction over securities fraud cases as well, and the SEC and FBI regularly work alongside the U.S. Department of Justice (DOJ) to build cases for criminal prosecution. State securities regulators may conduct or participate in securities fraud investigations as well. When securities fraud investigations implicate other areas of federal law (i.e., consumer protections or income tax), agencies such as the Federal Trade Commission (FTC) and Internal Revenue Service Criminal Investigations (IRS CI) may also get involved.


Q: Is Securities Fraud a Federal Crime?


Securities fraud is a federal crime in many cases. If the DOJ can prove that a corporate insider, broker-dealer, or other target acted intentionally or knowingly to defraud or deceive investors, then it can pursue criminal charges under the Securities Act of 1933, the Securities Exchange Act of 1934, and other pertinent federal laws. In many cases, the DOJ will target multiple entities and individuals by alleging their participation in a broadscale criminal securities fraud conspiracy.


Q: Is Securities Fraud a White-Collar Crime?


Yes, securities fraud is considered a type of white-collar crime. This is true in cases targeting corporations, corporate insiders, and broker-dealers as well as cases targeting family members, investors, and other individuals. As a white-collar crime, securities fraud is a serious federal offense, and a conviction can lead to substantial penalties.


Q: What Are the Fines for Securities Fraud?


Along with federal imprisonment, criminal securities fraud also carries significant fines. In most cases, these fines are up to $5 million for individuals and up to $25 million for corporations. But, depending on the specific allegations involved and the number of alleged violations at issue, targeted individuals and entities can potentially face tens of millions, if not hundreds of millions, of dollars in potential criminal liability.


Q: Is Securities Fraud a Federal Law Enforcement Priority?


Securities fraud has become a top federal law enforcement priority in recent years. This is attributable to both a rise in securities fraud and the growing number of securities being made available to retail investors. The SEC regularly conducts both formal and informal investigations, and it offers substantial rewards to whistleblowers who come forward with information about securities fraud. The SEC, FBI, and DOJ all regularly issue press releases touting their efforts to combat securities fraud as well—and these efforts encompass all forms of securities fraud from insider trading and corporate disclosure violations to broker-dealer account churning and embezzlement.


Schedule a Consultation with an SEC Defense Lawyer at Oberheiden, P.C.

If you are facing criminal charges or believe you may be under investigation for securities fraud, we encourage you to contact us right away. The sooner you call, the sooner we can take action to protect and enforce your legal rights. To schedule a free, confidential case evaluation with an experienced SEC defense attorney, contact us online or call 866-603-4540 today.

Further Information About Securities Fraud

Geographic Areas

Dallas 214-817-2053
Houston 713-454-7814
Detroit 313-634-0925
Baton Rouge 225-269-8749
New York 332-239-7345
Winter Park 407-890-0460
Miami 786-751-3247
Portland 207-222-7742
Nationwide 866-603-4540