Investment markets are unpredictable by nature. While certain funds and brokers may be considered more trustworthy than others, there is no way to guarantee a positive market outcome. However, if you are accused of engaging in fraud or deceit while managing securities on another person’s behalf, you could end up facing consequences worse than investment losses.
If you find yourself under investigation for securities fraud, retaining a skilled white-collar criminal defense attorney should be your top priority. An experienced Omaha securities fraud lawyer at Berry Law can help you understand the nature of your charges and work with you to secure a favorable case outcome.
How Federal and State Law Define Securities Fraud
Chapter 8, Article 11 of the Nebraska Revised Statutes makes it illegal to defraud, deceive, or mislead someone while selling them securities, advising them on investments, or managing an investment portfolio on their behalf. Neb. Rev. Stat. §8-1102(3) also prohibits an investment advisor from basing their compensation off funds they are responsible for managing. However, advisors can draft contracts that base their compensation on a fund’s total value over a definite period of time or on a specific date.
The Securities Act of 1933 also establishes how investment broker-dealers, agents, and advisers must register their credentials. Any failure to do so prior to engaging in professional securities services may be grounds for criminal charges. A knowledgeable attorney can offer clarification on what circumstances might justify securities fraud charges in Omaha.
Examples of Securities Fraud
The term securities fraud covers a broad range of alleged criminal conduct. Generally, these offenses are a form of deceptive practice involving stocks or other investment devices. Some common examples of securities fraud include insider trading, pump and dump schemes, and Ponzi schemes.
Insider trading is the most well-known form of securities fraud. This term can be used to describe two different types of fraudulent transactions. Insider trading can involve an executive or insider in a business making a stock purchase or sale based on non-public information. This offense can also involve a transaction that would otherwise be legal had proper reporting requirements been met.
Pump and Dump Schemes
A pump and dump scheme involves stockbrokers aggressively pushing a stock in hopes of artificially raising its price. Their efforts can lead to a buying frenzy that pushes the value of a stock well above its natural price. Those running the scheme will quickly divest of the stocks when it reaches peak value—shortly before the stock price plummets back to normal.
Ponzi schemes are a form of fraudulent investment where an individual recruits investors by promising them high returns with low risk. However, the leader of the scam does not actually invest the money in a stock. He or she will pay older investors with money brought in by new investors. No matter the type of securities fraud you were accused of, a skilled attorney can help you build a defense.
Potential Consequences Upon Conviction
Under Neb. Rev. Stat. §8-1117, virtually every willful violation of the Securities Act is considered a Class IV felony offense with a potential prison sentence of up to two years, as well as a $10,000 fine and up to 12 months of post-release supervision.
If you are convicted of securities fraud, you may also be financially liable to pay damages to anyone you defrauded. Specifically, Neb. Rev. Stat. §8-1118 allows an impacted investor to file suit for the value of any fees they paid for a fraudulent broker or agent’s services with a six percent annual interest rate, any losses they sustained on their investments, and attorneys’ fees.
The applicable statute of limitations for alleged violations of the Securities Act is five years. This means that prosecutors cannot press charges against you after five years of the alleged fraudulent acts. Retaining counsel from a lawyer in Omaha as soon as possible can help you get ahead of the prosecution and improve your chances of having your securities fraud charges reduced or dropped.
Common Defenses to a Securities Fraud Charge
Like with any white-collar crime, there could be numerous potential defenses in a securities fraud case. These defenses vary in scope from actively challenging allegations to highlighting the weakness of the government’s case.
Lack of Fraudulent Statements
Central to any fraud case is proof of a material fraudulent statement. Ultimately, if a statement was either not fraudulent or not material to the transaction, an acquittal is in order. Proving that your investment statements were not fraudulent or had little bearing on the transaction could be a strong defense in a securities fraud case.
Lack of Evidence
Sometimes the best defense is to point out the weakness of the government’s case. Ultimately, the prosecution has the burden of proving you are guilty beyond a reasonable doubt. If their evidence is lacking, you could benefit from focusing your defense on the state’s inability to prove their case.
Lack of Intent
This defense is similar to a lack of fraudulent statements. Not only does the government have to prove you made a fraudulent statement, but it must also show you made the statement intentionally. It is impossible to accidentally defraud someone, no matter how incorrect a statement might be.
If you made a mistake, it should not be prosecuted as an intentional fraudulent act. A determined securities fraud attorney can help you gather evidence to highlight your lack of intent.
Securities fraud is one of the few criminal offenses where an entrapment defense might be viable. Entrapment occurs when the government coerces a private citizen into committing a crime. Entrapment is more than the police using deception or providing an opportunity for a person to commit securities fraud.
Get in Touch with an Omaha Securities Fraud Attorney Today
Simply being accused of fraudulent activity can be a career-ending development for a broker or financial adviser. If you were charged with securities fraud, hiring a steadfast legal representative may be crucial to protecting your rights and best interests.