Securities laws and regulations are almost entirely a defined specialty within federal criminal defense law. These offenses, unlike other federal crimes, involve the Securities and Exchange Commission and, although often result in civil actions and penalties, can subject a person to harsh criminal penalties including extensive terms of incarceration.
The securities fraud statute makes it illegal for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange, to use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Securities and Exchange Commission may prescribe.
The relevant SEC rules broadly forbid three things:
(1) employing any “scheme or artifice to defraud;”
(2) making any untrue statement of material fact or omitting a necessary statement of material fact that would make the statement not misleading; and
(3) engaging in any “act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.”
If an individual has an affirmative or fiduciary duty to disclose information before a trade is made, his silence may subject him to liability. Those who exploit their fiduciary duty not to disclose information may also be liable.
A “manipulative or deceptive device or contrivance” is a term of art when used in connection with securities markets. It connotes intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities and refers generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity.” No actual monetary loss is required.
Brokers may be held liable for violating Rule 10b-5 if an investor proves that: “(1) the trading in his account was excessive in light of the investor objectives; (2) the broker in question exercised control over the trading in the account; and (3) the broker acted with intent to defraud or with willful and reckless disregard for the investor’s interests.”
Brent Mayr, Paul Schiffer, and Richard Esper are all federal criminal defense attorneys with the knowledge and skill to represent individuals under investigation for and charged with securities offenses. If you or a loved one are in this position, contact Brent Mayr, Paul Schiffer, or Richard Esper at 855-NT-GILTY (855-684-4589) to speak with them personally regarding your case.