Generally, securities fraud occurs when someone makes a false statement about a company or the value of its stock, and others makes financial decisions based on the false information. Although the crime itself isn’t complicated, the defense of a securities fraud charge requires a criminal defense attorney like Ann Fitz who understands securities regulation and is familiar with the nuances contained in the applicable Sentencing Guidelines.
One type of securities fraud occurs when an officer or director of a corporation doesn’t accurately report the company's financial information to its shareholders. This can artificially raise the value of the company’s stock and encourage investors to buy shares of an unhealthy company. If the company subsequently goes bankrupt, the people who bought shares based on false information lose their investment completely.
Another type of securities fraud occurs when a third party gives out false information about the stock market or a particular company or industry. “Pump and dump” schemes are a prevalent type of third party misrepresentations, where a person will find a small, unknown company with cheap stock and buy large amounts of its shares. The person will then send out false information about the company to encourage others to buy the stock, driving up the price. Once the price of the stock is high enough, the person sells, or "dumps," his or her shares for a profit, devaluing the stock.
Insider trading is a type of securities fraud that involves the trading of a corporation's securities (stocks, bonds, or stock options) by corporate insiders such as officers, key employees, directors, or holders of more than ten percent of the firm's shares. Insider trading is illegal when an insider buys or sells a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, non-public information about the security.
Examples of insider trading include:
The criminal penalties for insider trading are severe. If you are charged with insider trading, you need a criminal defense attorney who is experienced and knows how to protect your rights. Call us today.