Menlo Park, California, and the rest of Silicon Valley have attracted the attention of the U.S. Securities and Exchange Commission (SEC) for enhanced regulation and enforcement actions over the past few years. As a result, companies have faced more civil and criminal allegations of securities fraud and have been forced to spend more of their resources on compliance measures in order to ensure that they stayed on the right side of numerous federal and state securities laws.
All of the SEC scrutiny has also attracted the securities fraud defense lawyers from The Criminal Defense Firm to Menlo Park and its surroundings. Our experienced investigators and defense lawyers have helped countless companies and regulated securities professionals and firms comply with the law, invoke their rights during an SEC investigation, and vigorously defend against civil and criminal allegations of securities fraud.
Industries Most Frequently Under SEC Scrutiny
Certain industries have attracted SEC scrutiny more than others, often because of past conduct by the entrepreneurs within them and the regulatory framework that those industries have to comply with. For example, the following types of companies in Menlo Park seem to be more likely to be the targets of an SEC investigation than others:
- Mobile apps, especially those that facilitate consumer trading in securities
- Social media companies
- Cryptocurrency companies
- Companies that deal with cannabis and cannabis-related products
- Pharmaceutical companies
- Healthcare startups
Some SEC investigations into companies in these industries have led to criminal allegations and trials that have garnered national news coverage.
The Numerous Federal Securities Laws that Companies in Menlo Park Have to Comply With
While these industries have drawn more attention from the SEC, all companies in Menlo Park have to comply with the numerous different federal laws that regulate the securities market. The most important of these are the:
- Dodd-Frank Act
- Sarbanes-Oxley Act
- Securities Act of 1933
- Securities Exchange Act of 1934
- Foreign Corrupt Practices Act (FCPA)
Additionally, some of these laws authorize the SEC to create rules and regulations so the agency can enforce them better. Those regulations, though, frequently create massive compliance requirements that can sap a company’s resources or else expose them to substantial legal liabilities in an SEC enforcement action. In a few cases, those regulations have been used to criminally prosecute individuals and companies for certain types of securities fraud, such as insider trading.
Examples of SEC Fraud
There are a huge number of ways for individuals and corporate entities to commit SEC fraud. This is why securities laws and regulations are written in vague ways that prohibit things like “deceitful conduct” – the law’s creators knew that using concrete language would just enable bad actors to deceive people while still technically obeying the law. Unfortunately, that vague language can make it difficult for law-abiding companies and individuals to comply with them – what they view as a savvy business practice may be seen by the SEC as deceitful and lead to an enforcement action against them.
There are a few very common examples of conduct that amounts to securities fraud. Knowing them can help you comply with federal securities law in Menlo Park, California.
Embezzlement is the crime of theft by using property that has been entrusted to you for your own purposes. In the context of securities law, it most often happens when broker-dealers accept money from clients to invest on the client’s behalf, but then the broker-dealer reroutes it to their own accounts for personal use. It can also happen when a securities issuer persuades someone to invest in the company but then pockets the investment for their own purposes, rather than for the company.
A type of stock fraud is market manipulation, where deceptive conduct is used to alter stock prices for financial gain. One common tactic is a pump-and-dump scheme, where an investor buys lots of shares in a stock in order to make its price go up. When this entices other investors to jump on board, the first one dumps all of their shares at the elevated price. Another common tactic is spreading false information about a securities issuer to get people to buy or sell their shares. Many times these tactics are used together.
Mutual Fund Fraud
Mutual funds are large pools of money from a variety of investors that is then invested by the manager of the fund. Mutual fund fraud can happen whenever this setup is abused. For example, a broker who knows that the fund is about to purchase a bunch of shares in a company can buy some of their own before the fund’s transaction is processed, taking advantage of the lower price to maximize their own gains.
Omitting or Misrepresenting Information
Omitting or misrepresenting information that is material for investors to know about can also amount to SEC fraud. This is often done by securities issuers to cover up shortfalls, debts, liabilities, or a disappointing amount of revenue in order to continue to entice investment. By withholding information or by outright lying, these companies and their stakeholders can profit, often at the investor’s eventual expense.
The SEC is very concerned with insider trading. This is the crime of trading securities in reliance on material and confidential information that is not available to the public. Prohibited by SEC Rule 10b-5 rather than by a federal statute, the scope of insider trading is far broader than many people realize: The “insider” in insider trading refers to the information, not the person doing the trades. You can be acting on insider information – and therefore be liable for insider trading – even if you do not work for the company whose securities you are dealing with.
Broker-dealers are only allowed to trade securities with their client’s authorization. Breaking this rule is unauthorized trading.
Unfortunately, because of the nature of the securities profession and how broker-dealers are supposed to operate, this can put brokers in a difficult position: Their job is to maximize their clients’ investment, but sometimes the only way to do this is to act very quickly and in ways that they may not be authorized to act. Many securities professionals have found themselves in hot water for making an unauthorized trade on the behalf of a client that they thought would pay off, only for it to not work out.
Frequently Asked Questions About SEC Fraud in Menlo Park and The Criminal Defense Firm
When Should I Hire a Lawyer?
Ideally, you would hire an SEC fraud defense lawyer as soon as possible.
Many people choose to delay and only hire a lawyer after they have been formally charged with a civil or criminal offense of securities fraud. This prevents the lawyer that they do hire from invoking the client’s rights during the SEC investigation. In many cases, things could have been done to prevent incriminating evidence from getting discovered. Sometimes, an experienced defense lawyer can take a proactive approach during the investigation and divulge exculpatory evidence that could convince investigators that there is no case to prosecute. If successful, the case would be dropped and the suspect would be spared the costs of any further defense.
What Makes The Criminal Defense Firm Different from My Other Options?
Other SEC defense firms are structured differently from The Criminal Defense Firm.
At other firms, there will be several partners that have extensive experience in their chosen practice areas, plus maybe a few more senior-level lawyers. Below them will be numerous junior associates, many of whom just passed the bar exam. Below them will be even more paralegals who perform much of the administrative legwork on cases. Even if you hire a firm specifically for the experience and background of one of the partners or senior attorneys, the work on your case will be delegated to junior lawyers or even to paralegals for them to perform. In theory, the senior lawyer will be overseeing their work. In reality, that oversight is often very loose. From your perspective, the attorney that you wanted will generally be absent until the very end of the case.
The Criminal Defense Firm is different.
At The Criminal Defense Firm, we only employ senior-level attorneys so there is no one to delegate the work to. You can count on the personal representation from one of the lawyers that attracted you to our firm and can rest assured that all of the work being done is being performed by someone who has years of experience doing it.
We think that our approach is at least partially responsible for our long track record of successes in federal securities fraud cases.
Why Don't You Call Yourselves the Best SEC Fraud Defense Lawyers in Menlo Park, California?
This is something that we think is far more meaningful when it is a prior client who says it than when we do. Read their testimonials here.
The Criminal Defense Firm: SEC Fraud Defense in Menlo Park, California
If you deal with securities or investments in Menlo Park, California, you need to be aware of the SEC’s presence in the area. Complying with the law is essential, as even the smallest misstep can lead to an investigation.
Whether you need legal guidance for complying with federal securities laws or legal representation during an SEC investigation or to battle a charge of securities fraud, The Criminal Defense Firm can help. Our lawyers work diligently in the Menlo Park area. Contact us online or call our law office at (866) 603-4540.