Like many other criminal offenses, securities fraud is a very serious charge. Typically, securities fraud occurs when an individual says something that is not true about a stock or a company that causes investors to react. While this is a general description of securities fraud, it actually comes in several forms. There are various federal laws in place that regulate securities, which means that violating these laws or committing securities fraud often results in federal charges.
One of the most famous instances of securities fraud was the case of Martha Stewart. The court charged and convicted her of insider trading because she acted on confidential information that was not available to other shareholders or the public. If you are facing a securities fraud charge for one of the following acts, keep in mind that you still have rights and options.
Failure to report accurate financial information
Part of the duties of an officer of a corporation, such as a Chief Executive Officer (CEO), is to report correct financial information to shareholders in a timely manner. If a corporation’s officers do not report accurate financial information in an effort to artificially inflate stock prices, then the company is committing securities fraud. This is what occurred when ENRON took a fall after it became apparent that officers were falsifying the financial statements in order to defraud investors.
“Pump and dump” schemes
Another common type of securities fraud occurs when a third party buys a substantial amount of stock in a low level corporation and then puts the word out that the company is an up and coming investment opportunity. This causes investors to jump on board and buy stock which then results in an artificially high stock price. One the price hits a high, the third party that started the rumors sells his or her stock and walks away with a tidy profit.
A securities fraud charge in Sacramento can lead to some very high fines, court fees and even prison time. If you are facing securities fraud charges, a strong defense might help you successfully fight back and possibly avoid a conviction.