Individuals and businesses in Santa Barbara, California, can find themselves under investigation by the U.S. Securities and Exchange Commission (SEC) if the agency suspects them of committing SEC fraud. Covering a wide range of illegal conduct, criminal SEC fraud charges and civil allegations can be filed against regulated securities professionals, like broker-dealers, the brokerage firms that they work for, corporate executives, and even normal investors.
The Criminal Defense Firm is staffed with experienced SEC fraud defense lawyers who have legally represented people and companies that have been formally charged with securities fraud or who have found that they are under investigation for securities-related misconduct. With our legal guidance and vigorous defense strategies, many of our clients have minimized their legal predicament and protected their rights, business, and professional future.
Put our highly experienced team on your side
Brian J. Kuester
Former U.S. Attorney
Former DA
Amanda Marshall
Former U.S. Attorney
Local Counsel
Joe Brown
Former U.S. Attorney
& Former District Attorney
Local Counsel
John W. Sellers
Former Senior Trial Attorney
U.S. Department of Justice
Local Counsel
Linda Julin McNamara
Former Chief, DOJ Appeals
Local Counsel
Joanne Fine DeLena
Former Assistant U.S. Attorney
Local Counsel
Aaron L. Wiley
Former Federal Prosecutor
Local Counsel
Roger Bach
Former Special Agent (OIG)
Chris Quick
Former Special Agent (FBI & IRS-CI)
Kevin M. Sheridan
Former Special Agent (FBI)
Ray Yuen
Former Supervisory Special Agent (FBI)
Dennis A. Wichern
Former Special Agent-in-Charge (DEA)
The SEC in Santa Barbara
SEC investigations in Santa Barbara will come from personnel at the agency’s Los Angeles regional office. This office has jurisdiction over:
- Southern California, including Santa Barbara
- Nevada
- Arizona
- Hawaii
- Guam
The proximity of this office to people in Santa Barbara is a double-edged sword. On the one hand, it is not excessively far away if you need to make a personal appearance during your case. On the other hand, its location may mean that law enforcement officers are more likely to investigate your case more aggressively because it cropped up in their proverbial backyard.
Federal Laws Enforced by the SEC
The SEC is the federal agency that is tasked with enforcing a wide variety of federal laws that regulate the securities industry. Some of the most prominent and important of these laws include the:
- Securities Act of 1933
- Securities Exchange Act of 1934
- Foreign Corrupt Practices Act (FCPA)
- Dodd-Frank Act
- Sarbanes-Oxley Act
In furtherance of the enforcement of these laws, the SEC has promulgated a host of rules and regulations. Some of these, like Rule 10b-5, have arguably gone further than the laws that they aim to enforce. For example, Rule 10b-5 defines securities fraud in a very broad way that encompasses conduct that only tangentially relates to the Securities Exchange Act, the federal statute that the Rule was made to help enforce.
Types of SEC Fraud
Due to the number of statutes and regulations that cover criminal securities fraud and the breadth of conduct that they touch, it should come as no surprise to learn that there are numerous types of SEC fraud. Just a few of the types of cases that The Criminal Defense Firm has handled in the past have included:
- Market manipulation
- Fee fraud
- Short selling abuse
- Mutual fund fraud
- Insider trading
- Selling unregistered securities
The defense lawyers at The Criminal Defense Firm have handled these and many other types of white collar crime in Santa Barbara.
Market Manipulation
Because people stand to profit or lose money when stock prices fluctuate, it is completely foreseeable for people to try to take matters into their own hands and manipulate the market unlawfully. Just a few ways to do this are:
- Wash trading, where you repeatedly buy and immediately sell securities in a company in order to increase its transaction volume and attract the attention of other investors in the company
- Bear raiding, where large shareholders short a company’s stock and then sell your shares in bulk to try to spook other shareholders into selling, as well
- Pump-and-dump schemes, where you buy a company’s stock in bulk and then, once other investors have jumped on board the increasing values, sell them all at a higher price
- Simply spreading false information about a company in order to make its stock price go up or down
Fraudulent Fees
Regulated securities professionals can defraud their own clients by using complex or fraudulent fee structures. Just a couple of common ways to do this are:
- Churning, where the broker-dealer makes transactions for the sole purpose of inflating their fees
- Breakpoint fraud, where the broker-dealer fails to notify clients about relevant breakpoints in purchasing securities in mutual funds, which could have been used to discount the price for a large purchase over the breakpoint
Short Selling Abuse
Shareholders can bet that a company’s stock price will fall by borrowing shares in the company, selling them to others, then repurchasing them before returning them to the original owner. If the stock price has fallen in the meantime, the shareholder can profit. This is known as short selling, and can be abused in a few different ways, such as by:
- Short and distort schemes, where the short sale is made and then the short seller spreads false information about the company in order to knock the stock’s price down
- Naked short selling, where the shares are sold without being borrowed, first, essentially selling fake securities in the guise of a short sale
Mutual Fund Fraud
Mutual funds are massive pools of a diverse group of investors’ assets. They are invested by the fund’s manager.
Given the scale of these funds and the power that managers have over them, they are a common target for fraudulent conduct such as:
- Late trading, where after-hours trades are made using information released after the bell, but recording the transaction before the fund can calculate its daily net asset value
- Front running, where a broker knows about a large transaction involving a mutual fund that is about to made and uses that information to make transactions before it goes into effect
- Omitting or misrepresenting information on the mutual fund’s prospectus or other public disclosure document
Insider Trading
Insider trading is the crime of making a securities transaction based on material but nonpublic information. Importantly, you commit insider trading whenever the information is secret. It does not matter that you are not an insider at the company at issue. If you are told insider information by someone who works in the company, both you and the person providing the information can face legal liability – you, as the tippee, for using the information to trade in the company’s securities, and the tipper for violating their fiduciary duties to the company.
Selling Unregistered Securities
All securities have to be registered with the SEC, or fall into an exemption to the registration requirement, before they can be bought or sold. Failing to comply with this requirement can lead to allegations of unauthorized trading.
Frequently Asked Questions About SEC Fraud in Santa Barbara and The Criminal Defense Firm
What Types of Enforcement Actions Can the SEC Take?
The SEC can settle on one of three ways to pursue suspected SEC fraud:
- Pursue administrative remedies
- File a civil lawsuit
- Make a criminal referral and pursue criminal charges
Administrative cases are handled entirely within the SEC, and are generally for low-level offenses. However, they can be difficult to win because SEC agents act as both prosecutor and as the judge in your case.
Civil lawsuits can be filed in court. The SEC tends to take this route for serious violations that do not show an intent to defraud people.
If there are signs of an intent to commit SEC fraud, the SEC will pursue criminal charges. However, the agency does not have the legal authority to file them. Therefore, the SEC will make a criminal referral – generally to the U.S. Department of Justice (DOJ), but sometimes to the Federal Bureau of Investigation (FBI) – and assisting prosecutors from one of those agencies build their case against you.
What are the Penalties?
It depends on the type of enforcement action that you will face.
Administrative cases are limited to rescinding your ability to buy and sell securities, though financial fines can also be imposed.
Civil lawsuits can lead to higher fines, civil penalties, restitution payments, and disgorgement of ill-gotten profits. They can also damage your reputation more because the case will be in the public’s eye.
Criminal charges carry all of the financial penalties as well as the potential for significant amounts of prison time.
What Sets The Criminal Defense Firm Apart from the Others in Santa Barbara?
We think that several things set The Criminal Defense Firm apart from our competitors. One thing that our clients keep bringing up, though, is the experience of our lawyers and the access that our clients have to them.
Both of these perks come from the fact that The Criminal Defense Firm only employs senior-level lawyers who have numerous years of experience in the field. Many of them only came to The Criminal Defense Firm after serving as investigators and prosecutors in the SEC, DOJ, or FBI, where they handled hundreds of cases similar to your own. That experience is a hallmark of The Criminal Defense Firm.
However, unlike most other law firms, we only employ these senior lawyers. That means all of the work done on your case is done by one of them – not by a junior associate who just passed the bar exam or by a paralegal. It also means that, when you call The Criminal Defense Firm, you will talk with your lawyer, not with a secretary.
Why Don't You Call Yourself the Best SEC Fraud Defense Lawyers in Santa Barbara?
We do not like to tout our own services like that. Instead, we refer interested clients read the testimonials that have been left by our prior clients.
The Criminal Defense Firm: SEC Fraud Defense in Santa Barbara
If you think that you are under investigation for SEC fraud or have been charged with a crime related to a securities transaction in Santa Barbara, you need a lawyer and you need one now.
Call the SEC fraud defense team at The Criminal Defense Firm at (866) 603-4540 or contact them online.