Insider Trading & Securities Fraud
The U.S. Securities and Exchange Commission (SEC) is tasked with maintaining fair and efficient markets, facilitating capital formation, and protecting investors. Securities regulation refers to the area of U.S. law that addresses various aspects of transactions and securities dealings, including the trading of stocks, bonds, and other profit-sharing agreements. Laws regulating securities exist on the federal and state level.
There are several types of offenses that are often lumped together under the blanket term “securities fraud.” Generally speaking, securities fraud occurs when a person fails to disclose information or provides fraudulent information about a security, for example about a stock of a company, which causes others to make financial decisions based on that information.
For example, say an officer of a publically traded corporation fails to accurately report the financial performance of the company to its shareholders. This can result in an artificial inflation of the worth of the stock price. Investors may rush to buy shares based on the result of the fraudulent information, which is an inaccurate and artificially inflated stock price.
Another common example of securities fraud is when a third party intentionally spreads false information about a company to inflate the price of its stock, causing investors to buy shares in the company. To learn about “pump and dump” securities fraud, read our article What is Market Manipulation Fraud – aka “Pump and Dump”?
Insider trading is a common securities fraud. In fact, a number of well-known individuals have been found guilty of insider trading. Former Major League Baseball player Doug Decinces was recently found guilty of insider trading that reportedly earned him more than $1 million. Back in 2006, former Enron CEO Jeffrey Skilling was convicted of insider trading and other securities fraud.
Insider trading refers to the use of confidential or privileged financial information about a company’s financial state that is used to benefit the person involved in the security trade. It is the buying or selling of a security based on insider-information.
For example, say a person is given insider information about an upcoming merger that will skyrocket the value of a company’s stock. That person uses that information in deciding to buy significant shares of the stock before the information is made public. This person could be said to have engaged in insider trading, and could face very serious charges.
Charges of insider trading and other securities fraud are taken very seriously by federal law enforcement. Though, it is not uncommon for people who are charged with insider trading to not even be aware that what they were doing was illegal. Often people face these charges even when they were doing what they believed was legal or even part of their normal duties.
Securities Fraud Defense
Typically securities fraud crimes are charged as federal crimes, and are subject to aggressive investigation and stringent prosecution by federal law-enforcement officers. It is important to understand that if you are charged with a securities fraud-related crime, you could actually face prosecution and penalties even if you were not the key perpetrator in the fraud, but only had a distant association with the alleged criminal activity that was occurring.
If you are facing charges of insider trading or other securities fraud, you need an aggressive and experienced white collar criminal defense attorney on your side. Ashley D. Adams is a former fraud prosecutor with the United States Attorney’s Office. She understands how prosecutors operate. Given her prior work, she also has a longstanding and positive relationship with the U.S. Attorney’s Office, the Attorney General’s Office, and the Department of Justice. Put Ashley D. Adam’s experience to work for you.
The attorneys at Ashley D. Adams, PLC handle federal criminal cases throughout the United States, including Arizona, Oklahoma, Utah, and California.