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 the trading of 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
- 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 are violating this relationship with the shareholders.
Insider trading is regulating by the Securities Exchange Commission. Under the SEC Fair Disclosure regulation, a company must disclose non-public information to the public at large at the same time they intentionally disclose the information to one person.
Being Investigated for Securities Fraud or Insider Trading?
If you are being investigated by the SEC or NASD for securities fraud or insider trading, it is imperative that you have representation by attorneys with experience in this complex area of law. Our attorneys 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.