Regulations regarding securities are complex, and they impact all parties who participate in trading activities. This includes private investors, company insiders, securities brokers and more. If you have been targeted in a securities fraud investigation by the Securities Exchange Commission or by other law enforcement agencies, you may face serious charges with harsh penalties upon conviction. The nature of securities fraud is easy to understand. However, the complexities of securities regulations and laws must be taken into account when hiring a defense lawyer for your case. It is generally most advantageous to hire a skilled defense attorney with a specialization in securities fraud cases.

Understanding Securities Fraud
When someone falsely states information about the value of a company’s stock or about other aspects of the company that could influence valuation or investment decisions, they are participating in securities fraud. Keep in mind that an important nuance of securities fraud is that other people or entities must take financial actions that are based specifically on that false information.
There are three primary types of securities fraud. One of these is when the company itself does not accurately represent important information about profits or other factors to its shareholders. Often, this is done to encourage others to invest in a struggling company with the belief that the company is actually healthy.

The second type of securities fraud is insider trading. This occurs when a company’s confidential information is leaked to others, and those people make financial decisions based on early access to the information. This may also include when insiders in the company buy or sell the stock with the anticipation of stock movement after an announcement is to be made in the near future.
The third type of securities fraud is misrepresentation. This occurs when an investor or third party invests in a large amount of a relatively unknown stock and disperses false information about that company to drive the stock price higher. The original investor then sells his or her shares for financial gain.

Penalties for a Securities Fraud Conviction
If you are convicted of securities fraud, your offense will be classified based on the guidelines in the United States Sentencing Commission Guidelines Manual. Depending on the scoring of the crime under this manual, the minimum penalty would range from probation or imprisonment up to 33 months. However, aggravating circumstances are often taken into account, so probation is rarely the outcome. The maximum penalty is 20 years in prison with supervised release for up to three years afterward. Up to $5 million in fines could also be issued, and this is in addition to the required return of all profits that the individual gained through his or her illegal activities.

Defense Strategies in a Securities Fraud Case
The defense against securities fraud charges begins during the investigation and pre-trial stages. Because of the range of defense strategies that could be used in these early stages, it is important to get your securities fraud defense lawyer involved in the case as soon as possible. Before and during the trial, your attorney could argue that you acted in good faith. This means that you had no reason to believe that the misinformation that was used or spread was false.

Generally, ignorance of the law cannot be used as a defense, but there is a “No Knowledge” clause in the Securities Exchange Act of 1934. This clause states that an individual cannot be imprisoned if he or she did not know that their act was criminal. However, the burden of proof for this defense lies on the defendant.

Another tactic that your lawyer may use is substantial assistance. This will not return a not-guilty outcome, but it can result in a far more lenient sentence. Through this tactic, the defendant agrees to share crucial information that could lead to charges made against other parties.
A final defense strategy that is commonly used in securities fraud cases is illegal search and seizure. Often, this strategy is used to show that crucial information gathered during a search was collected unlawfully because it was outside the scope of the warrant. In this case, the information may be ruled inadmissible. As a result, the prosecutor’s case is weakened or even nullified.

Schedule an Initial Legal Consultation Today
A securities fraud case can have far-reaching implications that affect you for the rest of your life. While the prosecutor may have a solid case against you, a successful defense can counter the arguments made by the prosecutor. With this in mind, your next step should be to find an experienced attorney with deep knowledge of securities fraud law. Email or call our law firm today to request an initial consultation with us.

As the name implies, market manipulation is when someone deliberately attempts to interfere with the market. Generally, the intent is to deceive investors and reap profits from the act. This undermines public confidence to invest in the stock market. For those who choose to invest, they are placed in an unfair advantage.

Common Practices of Market Manipulation
Essentially, market manipulation occurs whenever companies or individuals decide to:
• Create a false demand for a security by distorting trades or prices
• Use inside information that is not available to the public to make stock trades; commonly known as insider trading
• Limit the number of available shares in a stock to the public
• Spread information about a company that is misleading or completely false

When is Market Manipulation Legal?
Not all actions of market manipulation is illegal, resulting in a securities violation. Actually, many organizations and groups participate in market manipulation. When the federal government engages in market manipulations, it is called intervention. The purpose for this “intervention” is to keep interest rates low and influence the value of the U.S. dollar.
The quality of information disseminated by groups who manipulate the market separates legal activities from illegal activities. As long as certain groups or individuals make truthful and accurate information available to the general public, no laws have been violated.
An example is when a group of investors decide to buy shares of a company that appears to have growth potential and a low stock price. After the purchase, the group may begin actively advertising the company with truthful information about the company in an attempt to encourage other investors to also buy stock.
Once interest causes the price of the stock to increase significantly, the original group of investors will sell its stock shares and pull a profit. Eventually, the stock price will hit a peak that will not be sustained long. When this occurs, the price will begin to decrease naturally once investors’ interest in the company recedes. Basically, this is the legal way bull and bear markets function.

When Is Market Manipulation Illegal?
Illegal market manipulation occurs when a group of investors or one investor spread untruthful information about a company. Falsely misrepresenting the company just to drive its stock prices up or down with the intent to increase the investor’s gain is against the law.
When market manipulation occurs, regulators will bring civil cases that bring about monetary penalties, but not jail time. A lower burden of proof exists in civil cases, which is why they are a common tool for illegally manipulating the market. Therefore, the courts could require that you pay a large sum of money even if your involvement was not proven beyond a reasonable doubt.
Proving a criminal case is much more difficult, even though there are different laws that could be used to prosecute an alleged market manipulation scheme. For example, 7 U.S. Code Section 13 (Violations generally; punishment; costs of prosecution) makes manipulating the market a felony that is punishable with up to 10 years in prison and a fine up to $1,000,000.

Factors That Can Affect Defenses against a Market Manipulation Charge
To avoid a conviction that leads to prison time and a hefty fine, your lawyer may discuss different criminal defenses that may work for your case. However, certain factors can impact any defense you present.
• Whether your intent was to persuade others to trade the stock when they would not have if given accurate information.
• Whether your intent was to create market conditions that were misleading.
• Your ability to manage risks associated with fully executed orders.
• You did not make sure there was a safe harbor for the duration of the order being exposed to the market to show it was not a disruptive trade practice.
• You continued to permit participants to make changes or cancel orders with the intent to enter a genuine transaction when the order was originally submitted.

What to do if You are Facing Illegal Market Manipulation Charges
If you have been accused of illegal market manipulation, you should call a criminal defense lawyer from Spodek Law Group, PC, who specializes in this area of the law. He or she will advise you of your rights to defend against these charges. Your lawyer will also highlight possible defenses as he or she guides you through the complex criminal justice system.