Securities Fraud Defense Lawyer
Under 18 U.S.C. § 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.
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:
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 criminal 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 Securities Fraud Defense Lawyer 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 federal securities fraud 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.
Schedule an Initial Consultation with 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, contact us online or call (888) 727-0472 today.
Dr. Nick Oberheiden is a national litigation and trial criminal defense attorney who practices exclusively in the area of federal law.