“Securities fraud” is a broad term that encompasses many different types of activities in the financial sector. Also referred to as stock fraud or investment fraud, securities fraud is essentially any attempt to misrepresent information that an investor would use to make investment decisions or an attempt to manipulate the market by using inside information to conduct financial transactions and stock purchases or sale. Although a Virginia federal securities fraud lawyer can explain how the law may apply to particular cases, we have provided a brief overview of the relevant federal regulations below.
A Virginia Federal Securities Fraud Lawyer Handles These Types of Cases
There are a number of different types of securities fraud or investment fraud which may be subject to penalties including prison time, significant fines, restitution, and other criminal penalties and civil remedies. An aggressive Virginia federal securities fraud lawyer can help take advantage of weaknesses in the government’s case.
Some of the most common securities fraud schemes include the following:
- Advance Fee Scheme – In such a scheme, the perpetrator tells investors that they must first send a small fee to cover certain expenses—for example, taxes or processing fees—and in return, they will receive returns on a larger investment. However, in such a case, the fees only go to line the pockets of the perpetrator; there is no legitimate investment, and hence, no returns.
- Ponzi Scheme or Pyramid Scheme – The name Bernie Madoff has become synonymous with Ponzi scheme after he was sentenced to 150 years in prison as a result of the largest Ponzi scheme and accounting fraud scheme in history. A Ponzi scheme or a pyramid scheme is one in which the perpetrator gives the illusion of a legitimate business and promises returns on investments. However, there is no legitimate business, and any returns to investors are paid by the investments of later investors. Eventually, such a scheme will collapse when there are no new investors to fuel returns.
- High Yield Scheme – A high-yield scheme is typically the product of unsolicited contact for a once-in-a-lifetime investment opportunity. The seller will promise extraordinary returns on a relatively small investment with little to no risk. Unfortunately for the investor, this “too good to be true opportunity” really is too good to be true.
- Insider Trading – Buying or selling securities based upon non-public information a person has secured in his or her duties at the company or through misappropriation of insider information.
Other ways in which securities fraud may occur is through late day trading or timing sales and purchases of securities to manipulate the market or using investments in a manner other than that which is promised.
Misrepresenting Information to Investors
This misrepresentation can take many forms:
- Withholding important information that would affect an investor’s decision
- Giving false or deceptive information to investors
- Giving inside information not publicly available, or acting on this inside information
- Intentionally offering bad investment advice
- Altering or falsifying accounting books to conceal key information or to misrepresent a company’s status
Both the Enron and Worldcom scandals revealed significant accounting fraud that led to billions of dollars of losses for investors, but accounting fraud and other forms of deception can occur on a much smaller scale, involving small businesses and individuals as well as multi-million dollar corporations.
Securities Fraud Laws in Virginia
Securities fraud is subject to both civil penalties and criminal prosecution. In Virginia, the rules for broker-dealers, investment advisors, brokerage services, and others involved in the sale and purchase of investments are found in the Virginia Securities Act (Va. Code, Title 13.1, Chapter 5). Violations of the state Securities Act are investigated by the Virginia State Corporation Commission (SCC) and its Division of Securities and Retail Franchising.
Under federal law, 18 U.S. Code Section 1348 deals with securities and commodities fraud and ascribes criminal penalties associated with deceptive practices in the purchase or sale of stock options, securities, investments, and commodities. Federal securities fraud is typically investigated by the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI). Additionally, the United States Attorney’s Office for the Eastern District of Virginia maintains in its Financial Crimes and Public Corruption Unit the Virginia Financial and Securities Fraud Task Force.
A Federal Securities Fraud Lawyer in Virginia Can Help Protect You
Civil penalties for securities fraud include injunctions, fines, and restitution. Additionally, investors who are said to be the victims of investment fraud have the right to sue for civil remedy.
However, civil penalties are not all a person accused of stock fraud has to worry about. In many cases, investment fraud is subject to criminal prosecution.
Under federal law, anyone convicted of securities fraud faces up to 25 years in prison for each count. The severe criminal penalties underscore the importance of consulting with a Virginia federal securities fraud lawyer.
Virginia Federal Securities Fraud Attorney
If you are accused of deceptive practices, misrepresentation, or other forms of investment fraud, your professional reputation is on the line, and you face significant penalties which can have a lasting impact on your personal life as well. It is imperative to swiftly secure experienced and aggressive representation from a federal securities fraud lawyer in Virginia. Call to find out how we can help.
