What is Securities Fraud?
As defined by the federal statute, securities fraud is committed when a person knowingly executes, or attempts to execute, a scheme to defraud any person in connection with a commodity OR misrepresents or promises money with the purchase or sale of any commodity for future delivery. In other words, securities fraud occurs when a brokerage firm, stockbroker, corporation or investment bank misrepresents information investors use to make decisions. These particular crimes are investigated by the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD) and can carry civil and criminal penalties. Some common types of securities fraud are manipulating stock prices, lying on SEC filings, Ponzi and pyramid schemes.
What is Insider Trading?
Insider trading is trading a corporation’s stocks, bonds, stock options or other securities by those with potential access to information about the company that is not public. Illegal insider trading constitutes a breach in the fiduciary or other relationship of trust or confidence where there is a misappropriation of non-public information from the company.
Who is an insider?
An insider is any of the following:
- A company’s officers
- Directors
- Any beneficial owner of more than ten percent of a class of the company’s equity securities
Essentially, when a corporate insider accepts employment, they are undertaking the legal obligations to shareholders to put the shareholders’ interest ahead of their own in matters relating to the specific corporation. Thus, when an insider buys or sells stocks based upon information only known within the company, they violate this relationship with the shareholders.
The Securities Exchange Commission regulates insider trading. Under the SEC Fair Disclosure regulation, a company must disclose non-public information to the public at large while intentionally disclosing it to one person.
Being Investigated for Securities Fraud or Insider Trading?
Suppose you are being investigated by the SEC or NASD for securities fraud or insider trading. In that case, it is imperative that you have representation by a federal criminal defense attorney with experience in this complex area of law. Our securities fraud and insider trading criminal defense lawyers will investigate your specific case and determine the most efficient way to proceed. The best thing you can do is to hire a lawyer right away to protect your rights. Call 803.252.4800 for a free consultation.
