While securities fraud (also known as stock fraud or investment fraud), takes many different forms, it commonly involves an individual making a misrepresentation about stocks or commodities to investors with a fraudulent state of mind. Securities fraud is a crime that can carry criminal penalties. It is also a common civil claim brought by investors or regulators for money damages and civil monetary penalties.
If you have been accused of securities fraud or any actions that could constitute investment fraud, you should consult experienced and knowledgeable counsel. At Delahunty & Edelman LLP, our team of former federal prosecutors has significant private-sector and law enforcement experience and is deeply familiar with securities fraud, including government investigations and all stages of civil and criminal litigation alleging securities fraud.
Along with avoiding criminal penalties and minimizing civil liability, we focus on minimizing reputational damage caused by allegations of investment fraud through a focus on efficient and discreet resolution of disputes.
Investment misrepresentations occur when someone misrepresents or omits a material fact and this misrepresentation results in a financial loss to the investor. It is important to note that fraud is a specific intent crime. Therefore, to prove the claim the government or plaintiff must show that the defendant made the misrepresentation with the intent to commit fraud.
Market manipulation occurs when an individual affects the supply or demand of a security, including stocks, bonds, mutual funds, and other funds that are exchange traded, through artificial means.
The term “Ponzi scheme” was made famous through highly publicized cases involving a financial scheme orchestrated by Charles Ponzi in the 1920s. The term refers to a financial scheme in which an investment professional misrepresents the value of an investment or sells a completely fake investment, often promising high returns in a short amount of time, and uses incoming money from new investors to pay returns to existing investors. Since the returns are not based on any actual increase in the value of the investment, the scheme inevitably falls apart when there are too few new investors or a large number of investors try to cash out their investments at once.
Insider trading occurs when an individual buys or sells stock or other securities based on access to confidential (i.e., non-public) information about the market. The prosecution of these cases is a top priority for the SEC.
Many individuals are surprised to learn that insider trading charges are not just applied to company executives and employees or government officials. Even if a spouse, child, family member, friend, or business associate of an individual with insider information buys or sells a security based on this nonpublic information, they may also face investigation and prosecution for insider trading.
The Securities Act of 1933 was created to provide investors protection from fraudulent information by regulating how a corporation handles financial statements. Its purpose was to prohibit misrepresentations and fraudulent information in the securities markets. Plaintiffs frequently file civil suits seeking damages under this statute because a company or one of its officers allegedly made a false or misleading statement to an investor or the market, causing damage to the value of the plaintiff’s investment. Both public companies and privately-held companies can be sued under this law for false statements made in connection with a security.
Many people associate the term “securities fraud” with news stories related to frauds on a massive scale involving large Wall Street entities, Fortune 500 companies, and staggering amounts of money. In reality, securities fraud occurs regularly with much smaller companies and investments. It is very easy to get caught up in a situation where securities fraud is alleged, requiring you to defend yourself from charges with lofty penalties including fines and jail time.
The Securities Exchange Act of 1934 oversees the rules for agents, broker dealers, and securities that operate on the secondary (or “over-the-counter”) markets. In an effort to create a level playing field and organize the market for investors, the Act also sets parameters that regulate the transactions and their participating broker-dealers.
If you have been accused of any form of securities fraud, whether civil or criminal, it is crucial that you immediately consult with a defense attorney who is deeply knowledgeable about securities and investment fraud.
At Delahunty & Edelman LLP, we have successfully defended clients against investment fraud allegations in an efficient and discreet manner. We understand that these allegations involve professional, reputational, and financial considerations in addition to the legal issues at hand.
Developing a strategic legal response to minimize the damage in each of these areas and resolve disputes as swiftly and efficiently as possible is our objective. When litigation is unavoidable, Delahunty & Edelman LLP is ready and equipped to mount an aggressive defense to the claims and/or charges against you.
To speak with one of our investment fraud defense attorneys, contact us today at (415) 891-6210 for a confidential and complimentary consultation.