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Securities & Commodities Fraud

July 11, 2020 Federal Criminal Attorneys

How Global Markets Have Allowed Fraud to Proliferate

Because of the huge financial losses and economic misfortune that securities and commodities fraud imposes on both individuals and the economy, federal agents and prosecutors fervently and aggressively target alleged fraudsters. The penalties for fraud can be monumental. In order to combat the charges, you need the assistance of an experienced and capable securities and commodities fraud lawyer

Integrated global markets have opened the field up to a whole new variety of investors with the means to grow and diversify their stock holdings. On the same token, however, this expansion has also led to a leap in the amount of fraud and misconduct in the securities and commodities realm. Referred to as securities and commodities fraud, this white-collar federal offense is basically characterized by deceptive actions designed to lure investors into buying or selling on the basis of false information.

Federal Laws Connected To Securities and Commodities Fraud

Akin to many other fraud offenses, securities and commodities fraud customarily involves complex schemes that induce others to put up money or assets on false pretenses. To curtail this form of fraud, it is a crime at both the state and the federal level, and federal agencies, including the Securities and Exchange Commission (SEC) and the FBI, play a major part in investigating and prosecuting persons suspected of committing fraud.

A securities fraud offense violates at least one, and sometimes more than one, of these federal statutes:

  1. The Securities Act of 1933
  2. The Securities Exchange Act of 1934
  3. The Trust Indenture Act of 1939
  4. The Investment Company Act of 1940
  5. The Investment Advisers Act of 1940

In numerous cases of fraud, there are individuals in certain positions who coget mmonly charged. These individuals often include:

  • Corporate executives who are suspected of insider trading
  • Business executives who are suspected of falsifying accounting entries
  • Investment brokers who are suspected of misrepresenting financial products

It is important to understand that this form of fraud doesn’t always entail high-level corporate officers, and there are those cases in which a securities and commodity fraud scheme never violated any of the above federal statutes.

The Various Forms of Securities and Commodities Fraud

Fraud has always existed as an ever-expanding field, and at times, fraudsters can be one step ahead of the federal agencies. Because of this, fraudsters are constantly dreaming up new types of schemes. Some of the more common forms of securities and commodities fraud are:

  • Advance fee fraud
  • Promissory note fraud
  • Ponzi schemes
  • Pyramid schemes
  • Prime bank investment fraud/trading program fraud
  • Market manipulation
  • Commodities fraud
  • Broker embezzlement

An additional common form of fraud is individual securities fraud. In this scheme, market insiders disseminate phony or misleading market information for the purpose of influencing stock prices. On the other hand, corporate securities fraud occurs when corporate employees use their enterprise to carry out fraudulent activities. Sometimes, the corporate employees withhold  or misrepresent information regarding the corporation in public filings in an effort to influence stock price. Other forms of fraud include microcap fraud, boiler rooms, and “short and distort” activities.

Consequences for Securities and Commodities Fraud

In general, when federal agents investigate suspected fraud, they are looking to charge everyone who is  involved with the scheme. A conviction on a securities fraud charge, however, can result in humongous penalties, including both civil and criminal penalties.

The fines for securities fraud convictions often depend on the unique circumstances of the case. Insider trading, for example, can be penalized by upwards of $5 million in fines. Other forms of securities fraud can cost perpetrators $10,000 or more in fines.

Prison sentences for securities fraud can include a 5-year federal prison term for each offense.

Restitution is also a common penalty in cases of securities fraud, the reason being that this type of fraud often impacts employees, investors, clients, or others who sustain a financial loss.

The Importance of Working with a Good Securities and Commodities Defense Lawyer

Numerous cases of securities and commodities fraud involve a wide range of convoluted facts and extensive federal investigations. Moreover, due to the fact that a conviction can lead to lengthy incarceration, enormous fines, and a ruined career, you should speak with a federal crimes defense lawyer right away when you discover that you’re under investigation or under arrest. 

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