Defending Federal Securities Fraud Charges

Last Updated on: 2nd June 2025, 10:19 pm

When the FBI Shows Up at Your Trading Desk: Defending Federal Securities Fraud Charges

6 AM. Your doorbell rings. It’s not FedEx.

It’s the FBI, and theyre not there for coffee. They’ve got a warrant, a team of agents, and boxes for your computers. Your neighbor’s watching from their window as they walk you out in cuffs. Securities fraud charges just blew up your life .

Here’s what most people don’t get—securities fraud isn’t just about insider trading anymore. The feds expanded this thing to cover everything from cryptocurrency pumps to lying on a conference call. Under 15 U.S.C. § 78j(b), they just need to show you made a “material misstatement” in connection with buying or selling securities. That’s it. That’s how they get you.

And the penalties? We’re talking 20 years. Per count.

What Securities Fraud REALLY Means (In Plain English)

Forget what you see in movies. Securities fraud is when the government says you lied or cheated in connection with stocks, bonds, or any investment. But here’s where it gets nasty—

They don’t need to prove you made money. They don’t even need to prove anyone lost money . They just need to show you weren’t “honest” about something important. Material misrepresentation, they call it. I call it the governments favorite weapon.

Think about that.

You send an email saying “the deal looks good”when you have doubts? Securities fraud. You trade on information you overheard at Starbucks? Securities fraud. You tell investors your company’s doing great when its struggling? Yep, securities fraud.

The SEC and DOJ—they’ve turned this into a sport. And your the target.

THE DEADLY TAG TEAM: When SEC and DOJ Come Together

Here’s what Wall Street lawyers won’t tell you straight: when you get hit with securities fraud, it’s never just one agency. The SEC files civil charges. The DOJ files criminal charges. Same facts, two different cases, double the nightmare.

The SEC? They want your money. ALL of it. Disgorgement, they call it—which basically means they take every penny you made, plus interest, plus penalties. That deal you did in 2018? They want those profits. With interest calculated daily.

The DOJ? They want your freedom.

And heres the sick part—they share everything. That deposition you gave to the SEC? The DOJ has it. Those documents you produced in the civil case? Yep, prosecutors are reading them right now. They call it “parallel proceedings.” I call it getting screwed twice.

Last week, I’m in Judge Caproni’s courtroom in the Southern District. My client—a hedge fund manager—is facing both SEC and criminal charges for alleged insider trading. The AUSA literally quotes from his SEC testimony. Word for word. That’s the game there playing.

The “Evidence” They Think They Have

< p>Prosecutors love securities fraud cases. Know why? Because everything’s written down. Every trade, every email, every text message—it’s all there. They’ve got:

•Bloomberg chats (yeah, they subpoena those)

• Cell phone records showing who you called

• Trading records down to the millisecond

• Emails you thought you deleted (surprise: IT keeps backups)

• That encrypted app you used? They cracked it

But wait—here’s where they get cocky. They think having lots of paper means having a case. Wrong. I’ve seen 10,000 pages of “evidence” crumble because the government couldn’t prove one thing: criminal intent.

Scienter. That’s the magic word in securities fraud. It means you knew what you were doing was wrong. And that my friend, is harder to prove than prosecutors want to admit.

Let’s Talk About What Your Going Through

You can’t sleep. I get it.

Your wife’s asking questions you can’t answer. Your kids know somethings wrong. Your checking your phone every five minutes, waiting for the next bad news. Every time someone knocks on the door, your heart races.

The firm put you on “administrative leave”—which everyone knows means your fired, they just haven’t done the paperwork yet.Your broker’s licenses? Suspended. Your country club membership? Yeah, that’s getting awkward.

Look, I’m not gonna sugarcoat this. Securities fraud charges change everything. But here’s what 15 years of fighting these cases taught me—the governments not invincible. They make mistakes. They overcharge. They get greedy.

And that’s where we come in.

DEFENSE STRATEGIES THAT ACTUALLY WORK

Forget everything you’ve heard about cooperating. Here’s how we really win these cases:

1. Attack Materiality

The government loves to claim every statement is “material.” BS. Last month in the Eastern District, we got charges dismissed because the allegedly false statement was buried in footnote 47 of a 200-page document. No reasonable investor reads footnote 47. Not material. Case closed.

2. Challenge the Loss Calculation

This is where cases live or die. The feds hire some PhD economist to say your client “caused” $50 million in losses. We hire our own expert who shows the stock dropped because of market conditions, not your clients statement. Suddenly their loss number crumbles.

I had a case—United States v. Chen (look it up)—where the government claimed $30 million in losses . Our expert proved $28 million was from a general market downturn. Sentencing guidelines went from 15 years to probation.

3. The “No Scienter” Defense

You can’t commit securities fraud by accident (mostly). We show the jury your client believed what they said was true. Those optimistic revenue projections? That’s not fraud—that’s business . Every CEO in America talks up their company. Since when is optimism a crime?

4. Constitutional Challenges

The feds love their wiretaps and email searches. But they screw up the warrants. All. The. Time. Magistrate judges rubber stamp these things at 2 AM. We’ve gotten entire email seizures thrown out because the warrant was overbroad. No emails, no case.

Remember—Rule 41 of Federal Criminal Procedure has requirements. When agents violate them ,we pounce.

War Stories from the Trenches

Let me tell you about a case that still pisses off the prosecutors in SDNY…

Investment banker. Top firm. The FBI raids his Tribeca apartment at dawn—full tactical gear, like he’s El Chapo or something. They seize everything. Computers, phones, even his kids’ iPads. The indictment comes down: 47 counts of securities fraud. The press goes nuts. “Another Wall Street Criminal” the headlines scream.

Here’s what really happened: Our client forwarded an email. That’s it. One email about a potential merger, sent to his personal account so he could read it on the train. The feds called it “insider trading preparation.” We called it doing his job.

18 months later? Full acquittal. All 47 counts. The AUSA wouldn’t even look at me when the verdict came in.

But here’s the kicker—his career was still destroyed. His marriage almost didn’t survive. His kids got bullied at school. That’s why you need lawyers who end this fast, not milk it for fees.

Why Cooperating is Usually STUPID

Every white collar defense lawyer in Manhattan will tell you to “consider cooperation.” They’re thinking about their relationship with prosecutors, not your future.

Here’s the truth about cooperation in securities cases:
– You have to plead guilty (bye bye, licenses)
– You have to testify against colleagues (bye bye, career)
– You have to tell them EVERYTHING (bye bye, Fifth Amendment)
– Prosecutors can still screw you at sentencing

I’ve seen cooperators get more time than defendants who went to trial. Why? Because the judge didn’t like their “attitude” during testimony. Or because they “minimized” their conduct. Or because the prosecutor decided they didn’t help enough.

Cooperation in securities fraud is like playing poker with your cards face up. Sure, occasionally it works. But most of the time? Your just helping them build cases against other people while destroying your own life.

We don’t play that game.

The Parallel Proceedings Nightmare Nobody Warns You About

Okay, this is where it gets really fun. While your fighting criminal charges, the SEC is suing you civilly. While your trying to save your freedom, they’re trying to take your money. Two fronts, two different sets of rules, one exhausted defendant.

The SEC doesn’t care about the Fifth Amendment. They’ll depose you for 8 hours straight. Every answer you give becomes ammunition for the criminal case . Stay silent? They’ll use that against you in the civil case and ask the judge for “adverse inferences.”

Its a trap. A perfectly legal trap.

Last year, we had a client—cryptocurrency entrepreneur. SEC served him with a Wells Notice (that’s their way of saying “we’re about to sue you”). Two weeks later? FBI shows up. Same exact allegations, but now it’s criminal.

Most lawyers would’ve had him testify in the SEC investigation to “look cooperative.” We told him to shut up and plead the Fifth to everything. The SEC got their default judgment, sure. But when the criminal case went to trial? They had nothing. No admissions, no statements to twist, no contradictions to exploit.

Not guilty. Every count.

Yeah,, he paid a civil penalty. But he’s not in federal prison. I’ll take that trade every time.

The Bottom Line: You Need Fighters, Not Paper-Pushers

Securities fraud charges aren’t parking tickets. The government is coming for everything—your money, your career, your freedom. They’ve got unlimited resources, teams of analysts, and judges who used to be prosecutors.

You know what they don’t have? The motivation we do.

Those prosecutors? They’ll go home at 5 PM whether they win or lose. They’ll get promoted either way. Your case is just another file on their desk.

For us? For you? This is war. This is your life. This is your family’s future.

We’ve handled hundreds of securities fraud cases. We’ve battled the SEC in federal court. We’ve cross-examined FBI agents until they couldn’t keep their stories straight. We’ve taken on the Department of Justice and won. Not because we’re nice. Not because we play golf with prosecutors.

Because we fight harder.

The government thinks your just another Wall Street criminal whose gonna roll over, cooperate, and beg for mercy. They think your scared of trial. They think your lawyer will push you to plead guilty to make their life easier.

They haven’t met us yet.

You’re reading this because federal agents turned your life upside down. Because prosecutors are threatening decades in prison. Because everyone else is telling you it’s hopeless.

It’s not.

Pick up the phone. Call us now. Today. Before you talk to anyone else, before you make any decisions, before the government makes their next move.

We don’t promise miracles. We promise war. And in federal securities fraud cases, that’s exactly what you need.

212-300-5196. Call now. The governments not waiting. Neither should you.