Securities Fraud Investigations and Prosecutions

Regulation of the securities industry is very extensive in the United States. This intense regulation sometimes leads to investigations by regulators who often work in tandem with the FBI and criminal prosecutors. This partnership between the Securities and Exchange Commission (the “SEC”) and federal prosecutors can later result in a criminal prosecution.

The Great Recession of several years back led to an explosion of securities investigations that turned into criminal prosecutions. Such investigations fall into a wide variety of fact patterns. One pattern is the well-known “Ponzi scheme.” The papers and TV regularly run stories about federal prosecutors making claims that a Ponzi scheme was a criminal enterprise. In these cases, investigators claim that the operator of an investment paid off unreasonably high returns to the earlier investors by using the money received got from later investors. Other times we see securities investigators who claim that someone was trading on inside information to buy or sell a stock or other investment. We also see situations sometimes referred to as a “pump and dump,” whereby investigators claim that somebody released false or misleading information in order to “pump” up the value of a stock, after which they “dumped” the stock when it reached unreasonably high levels in the market.

The SEC is the agency in charge or regulating the securities industry. Most investigations begin when the SEC either learns of on its own, or is told about, some alleged misdeed by some person or entity involved in the securities industry. Because regulated persons and entities are obligated to cooperate with the SEC (or else, risk losing their license), such persons and entities often turn to lawyers who are specialists in the securities business.

If the case is going to turn into a criminal matter, it usually involves a grand jury investigation, and the federal securities laws include their own set of criminal penalties. However, federal prosecutors often use other, more general federal criminal statutes in federal criminal investigations and prosecutions involving the securities laws. For instance, it is not uncommon for federal prosecutors to also use the mail fraud, or wire fraud statues, in these matters. Money laundering allegations are also regularly included, which increases the potential penalties along with the possibility that the government will take most or all of the defendant’s assets.

People involved in the securities field who are caught up in such an investigation need an attorney who is accustomed to handling federal prosecutors and their tactics at this early stage in a case. At Finch McCranie LLP, our lawyers are not only well-versed in the intricacies and nuances of securities laws, but we also possess the substantive knowledge and skill necessary to deal with federal criminal investigators and prosecutors. If you have a matter that involves allegations of this nature, please call us at (404) 658-9070 and schedule a consultation.

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