DC Securities Fraud and Insider Trading Lawyer
Many different people may find themselves facing charges of securities fraud or insider trading, including investment brokers, corporate executives, accountants, investment advisors, or even individual corporate employees. Securities fraud cases may be high profile cases and regularly in the news, or they may affect small companies in cases that never make headlines. Often, people involved in securities fraud schemes do not realize the full implications of their involvement. Suddenly, they may find themselves under investigation by the Securities Exchange Commission (SEC) or facing charges with serious consequences, including extensive financial penalties and incarceration. If you have any suspicion that you may be under investigation for securities fraud, it is important that you contact a Washington, DC securities fraud attorney as soon as possible.
What is Securities Fraud?
Securities fraud is a white collar criminal offense that may carry serious consequences. Most simply, securities fraud involves manipulation of the stock market based on false or fraudulently obtained information. Such deceptive actions aimed at inducing others to buy or sell investments violate securities laws. Some of these securities laws include:
- Securities Act of 1933
- Securities Exchange Act of 1934
- Investment Advisers Act of 1940
- Sarbanes-Oxley Act of 2002
- Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
These laws are complicated and many different types of actions may violate them. Some actions include:
- Accountant fraud, which involves making false entries in books, therefore providing potential investors with false information about the financial state of the company to encourage investors to purchase stock at a higher price.
- Ponzi schemes, which are fraudulent investment operations that use new investment funds to pay returns to other investors, rather than paying returns from the actual profits. The largest reported Ponzi scheme by an individual was by Bernard Madoff, who pleaded guilty and was sentenced to 150 years in prison in 2009.
- Internet fraud, which occurs when a person uses the internet to disseminate false investment information via email spam, chat rooms, boards, investment newsletters, or other forums to inflate the price of stocks, allowing the fraudsters to dump their stock at a high price.
- Corporate misconduct, in which high-level corporate executives collude to cover up accounting fraud and other types of related corruption. Perhaps the most famous example of corporate misconduct was exposed within the energy giant Enron in the 2000’s.
Another common type of securities fraud is called insider trading. Insider trading occurs when an individual has access to information regarding a company to which public does not have access, and uses that access to make investments for their own personal gain. Investing based on non-public information is against the law because it is unfair to all of the potential investors who do not know the information.
Insider trading in the United States may violate provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, the Insider Trading Sanctions Act of 1984, and the Insider Trading and Securities Fraud Enforcement Act of 1988. Conviction of the latter two laws can result in financial penalties of up to three times the financial gain or loss that resulted from the insider trading. One recent high-profile case of insider trading involved media celebrity Martha Stewart, who spent five months in prison and five months on house arrest.
Securities fraud can result in large fines, restitution to victims, probation, or even potentially five years of incarceration per count of fraud. Because of these serious consequences, you should always consult with an attorney who is experienced in defending securities fraud charges as soon as you suspect you are under investigation or may be implicated in a scheme. Do not hesitate to contact the DC law office of Price Benowitz today for a free consultation.