Securities Fraud

When investors are deceived into investing, or when a stockbroker, accountant or other person in a position of responsibility in regards to investments) carries out unsuitable trading, unauthorized trading or other actions with the intention of defrauding the investor, this constitutes the crime of securities fraud, also referred to as investment fraud. Depending on the manner in which securities fraud is carried out, a defendant may also face charges of wire fraud or mail fraud.

Insider trading, moving a client's investments without authorization, over-concentration of investments in one area, unsuitable trading and creating illegal accounts are all ways that securities fraud may be committed. Falsifying financial information in order to attract investors may be another form of this crime. This is a serious criminal offense which may be charged in state or federal court, resulting in fines, imprisonment and restitution, amongst other penalties. As a federal crime, securities fraud is investigated and prosecuted by the SEC (Securities and Exchange Commission) and FBI (Federal Bureau of Investigation). These agencies and the Department of Justice take securities fraud offenses very seriously, as the U.S. economy is dependent on the integrity and success of securities and commodities.

Federal Penalties for Securities Fraud

Whether it is committed by misrepresentation, insider trading or fraudulent accounting, securities fraud is considered a white collar crime. It is a form of theft committed by deception as opposed to force. A defendant convicted of securities fraud may face up to 20 years in prison as well as heavy fines, including civil fines assessed by the SEC and National Association of Securities Dealers (NASD).

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