Imagine you’re an investment professional who has been working in the industry for two decades. Over the years, you’ve built an excellent career and reputation. However, a recent, unjustified accusation is threatening to destroy everything you’ve worked so hard to create. You’ve been accused of securities fraud.
Securities fraud relates to misrepresentation, fraud and unlawful actions associated with the purchase and sale of investments. Charges related to securities fraud are not particularly uncommon when someone works in the securities, investment and banking industries. Just because you have been accused of this crime, however, does not mean that a court of law will find you guilty.
Here are three of the most common types of securities fraud:
Corporate-level securities fraud: Sometimes securities fraud happens on the corporate level when a company misrepresents or falsifies financial information that it reports to shareholders. There have been many documented cases of companies “cooking the books” to make their businesses appear more profitable than they are, keep investors interested and prevent shareholders from wanting to sell out of the stock. Because it involves misrepresentation and fraud, this kind of behavior is highly unlawful.
Insider trading: This involves an investor making investment decisions based on insider information that has been obtained through special connections — or access to confidential information — from within an organization. Making trades based on confidential business dealings is illegal and an insider trading conviction can lead to jail time.
Third-party misrepresentations: Another type of securities fraud involves the release of false or misleading reports pertaining to a particular investment. The goal of third-party misrepresentation is a “pump and dump” scheme that causes investors to become interested in buying an investment based on false information and fraud. When the investors become interested, they will buy the investment resulting in a rise in price. The perpetrators of the pump and dump scheme will then sell their holdings of the investment to make a considerable profit before it falls.
If you were accused of securities fraud, no matter the circumstances, you might want to educate yourself on the criminal defense options available. You may be able to navigate your criminal proceedings in a way that lessen the threat and/or severity of convictions and punishments in your case.