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penalties for securities fraud

By Spodek Law Group | July 19, 2023
(Last Updated On: July 28, 2023)

Last Updated on: 28th July 2023, 07:32 pm

Penalties for Securities Fraud – A Defendant’s Guide

Allegations of securities fraud trigger primordial fear among investors and executives. The potential penalties involved match the gravity of the crime, carrying severe criminal and civil consequences. When your reputation, wealth, and freedom hang in the balance, mounting a tenacious legal defense becomes paramount.

This guide examines the various penalties imposed for securities fraud convictions. We’ll outline criminal sanctions, monetary fines, civil liabilities, professional bars, corporate consequences, and collateral damages. We’ll also discuss how experienced legal counsel defends against charges and blunts penalties.

Gain insight into the penalties you face to make informed decisions when charged. Knowledge and preparation offer your best hope of emerging safely.

Criminal Penalties

On the criminal side, securities fraud convictions commonly bring:

– Imprisonment – Typical sentences range from 1-10 years per charge. Some cases see 20+ year sentences.

– Fines – Individual fines up to $5 million per violation are common. Fines are per charge, so can multiply.

– Probation – Defendants often get 1-5 years probation with restrictions following incarceration.

– Forfeiture – Courts confiscate all money obtained from fraudulent activities.

Cumulatively, these criminal sanctions wreak devastating personal consequences. But criminal convictions also trigger a cascade of additional civil liabilities.

Civil Liabilities

Securities fraud charges instantly expose defendants to an onslaught of civil litigation aiming to recoup investor losses. Major civil vulnerabilities include:

SEC Disgorgements – The SEC seeks repayment of all ill-gotten gains from the fraud.

– Investor Lawsuits – Defrauded investors and creditors file private lawsuits seeking repayment of losses due to the fraud.

– Shareholder Suits – Shareholders often sue for damage fraud causes to share prices.

– Class Actions – Multiple victims often combine into class actions to seek larger recoveries.

– ERISA Actions – Retirement funds losing investments frequently file ERISA breach of fiduciary duty claims.

These civil actions often yield judgments matching or exceeding criminal penalties. They can bankrupt defendants through relentless financial bloodletting over years.

Professional Bars and Suspensions

On top of harsh criminal and civil penalties, securities fraud convictions also trigger permanent professional repercussions:

– Licenses Revoked – Individuals lose professional licenses like brokerage, legal, and accounting credentials critical to livelihoods.

– Industry Bars – Securities regulators permanently bar defendants from working again in the investment sector in any capacity.

– fiduciary Bars – ERISA regulators block those convicted from ever serving again in retirement plan management roles.

– Banking Bans – Banking regulators prohibit defendants from engaging in any future banking work.

– Company Bans – Public companies face multiyear bans on raising capital, destroying prospects.

These professional exclusions inflict lasting financial and reputational damage that makes resuming normal working life virtually impossible. Their impact cascades down generations.

Corporate Penalties

For corporate defendants, securities fraud convictions also impose enduring commercial harms:

– Recidivist Designations – Subsequent minor regulatory violations trigger major new charges due to “repeat offender” status.

– Industry Suspensions – Exclusion from government contracts or healthcare programs destroys key revenue streams.

– License Revocations – Actions like losing a banking charter or pharmaceutical license prove commercially cataclysmic.

– Talent Impairment – Toxic reputations block companies from recruiting top talent needed to thrive and innovate.

– Financing Constraints – Prior charges severely limit future access to public markets and commercial credit needed for growth.

– Public Stigma – Negative public perceptions erode brand value, consumer trust, and long-term viability.

Collectively, these costs forever alter convicted companies’ commercial trajectories. Recovery becomes tremendously difficult, if not impossible.

How Lawyers Blunt Penalties

Once retained, seasoned securities fraud counsel’s first priority is avoiding conviction entirely through dismissal or acquittal. But skilled lawyers also implement strategies to mitigate penalties upon conviction:

– Aggressively contesting forfeiture amounts sought by prosecutors.

– Seeking prosecutorial relief for cooperating clients through deferred prosecution or plea deals.

– Thoroughly preparing alternative sentencing memoranda detailing mitigating case circumstances.

– Producing volumes of supporting letters from business/charity associates highlighting positive character.

– Creatively structuring restitution agreements with flexibility tailored to client cash flows.

– Negotiating civil settlements with upfront payments and extended installment structures.

– Cooperating with regulators to secure conditional licenses allowing restricted but livelihood-saving work.

The right lawyers know how to creatively blunt swords arrayed against you. But avoiding their strike entirely remains the ultimate goal.

Take Control of Your Future

Securities fraud charges bring steep consequences, but experienced counsel helps brave defendants fight back. By exploiting legal technicalities and maximizing prosecutorial vulnerabilities, skilled lawyers undermine charges and defeat penalties. Don’t cower awaiting fate. Call Todd Spodek at 212-300-5196 to explore crafting an elite defense based on your unique circumstances. With liberty at stake, action cannot wait.

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