Securities fraud usually references occurrences of falsified or misleading stock or trading information that has been intentionally and knowingly given to stockholders from a financial analyst or from another market professional. Other common examples of this type of fraud may also include insider trading, investor fraud, stockbroker corruption, or other market-related fraud for gain. As technology advances and information becomes more easily accessible and readily available, accusations of insider trading and otherfraud allegations are more common than they ever have been before. If you have been accused of related crimes, having an experienced securities fraud defense attorney in your corner is critical.
Joffe Law, P.A. has an experienced staff team with decades of experience defending clients from allegations of insider trading. If you have been accused of securities fraud or or believe you may face charges of a crime like this, it’s important that you seek legal representation as soon as possible. Understanding how this type of crime is defined and what penalties may be imposed in Florida may help you better decide what your next move should be.
Do not say anything that might incriminate you. Speak with an attorney first.
What constitutes securities fraud?
In most cases, securities fraud occurs when an individual makes a false statement concerning a company or the value of that company’s stock which causes others to make financial choices based on this false information. Insider trading usually involves insiders like executives or board members who buy or sell stocks based off of information that they have gained that is not yet publicly accessible. While the crime itself is not very complicated, if you don’t have an in-depth understanding of securities regulations, you may actually have committed a crime without even knowing it.
Securities fraud by the company
One of the main types of securities fraud that we see today has to do with falsification and criminal activity that comes from a company itself. This usually happens when an officer or a director is inaccurately reporting the financial information of the company to investors, shareholders, or other individuals with a financial stake in the company. Doing this may artificially raise the value of a company’s stock or stock portfolio which may encourage investors to purchase shares of a company that isn’t actually financially viable. If later the company goes bankrupt, anyone who bought shares based on the misleading information will then completely lose their investments. One of the most famous examples of company securities fraud and insider trading was the Enron scandal. With this scandal, corporate officials intentionally failed to report company expenses causing their profits to look significantly larger than they were in real life. In some cases, higher-ups will make it look as if other company employees were responsible for the falsified information. This is just one of the reasons that having an experienced securities fraud defense lawyer on your side can be so critical.
Another common type of securities fraud is insider trading. Insider trading usually takes place when an individual with confidential information about a company’s financial status takes that information and uses it for financial gain. This is usually done by buying or selling stocks before the critical financial information becomes readily available to the public. Insider trading may be done by just about anyone in a company at any level. Insider trading may also happen when an individual buys or sells information that has not been released to the public with the intent to sell shares of any stock that they already own or sell the unreleased stock information to another individual. One example of insider trading would be if an individual at a corporate level who had access to a company’s private financial statements noticed that the company they were working for was losing money quickly. Let’s say that this individual accurately deduced that their company was heading toward bankruptcy. As a result, this individual decides to sell all of the shares that they own in the company without notifying any higher officials. Technically, this individual would have just committed an act of insider trading. To take it a step further, let’s say that this individual decided to sell this information to another employee or to one of the company’s lead investors. This would also be considered an act of insider trading.
The third most common type of securities fraud has to do with third-parties giving false information to make a profit in a roundabout way. This may be termed “pump and dump” scheming. These schemes usually involve the purchase of inexpensive stock in large quantities with the intent to encourage others to buy stock in the same small company. The schemer will then drive the price of the stock up as high as possible before selling it off and causing a large fluctuation in the market. Here’s an example. Let’s say that an individual purchases 50,000 shares of a penny stock for a small pharmaceutical company. They then go on the internet and publish videos and information about how this pharmaceutical company is one of the best investments to make and how everyone who has a brain should be purchasing stock. When the penny stock now costs significantly more, the initiator will sell off all of their shares and reap the financial increase. This can be in the millions of dollars. While schemes of this nature may be difficult to prove, individuals who do get caught will face steep penalties.
What are the usual penalties?
The Securities and Exchange Commission is a federal agency that prosecutes these crimes. This means that those charged with crimes of this nature may face both state and federal penalties. This can lead to double sentences, decades in prison, fines of six figures and more. Sentencing varies depending on the exact crimes committed.
Finding the right defense for your case
The attorneys at Joffe Law, P.A. stand ready to review your case as soon as possible. Our experienced legal team has the skill and abilities needed to help get your case the best possible outcome. We have defended clients accused of securities fraud at both state and federal levels. If you are in Hillsborough County and believe that you will be facing allegations of securities fraud, don’t wait. The sooner you retain an Tampa insider trading lawyer, the better the likelihood of a more favorable outcome.