Securities Fraud Defense Lawyers in Los Angeles
The term “securities fraud” is common in news stories related to large-scale fraud on Wall Street, involving massive amounts of money. What is less commonly understood is that securities fraud can occur on a much smaller scale, even accidentally. Small business owners, entrepreneurs, and people investing in the stock market can easily get caught up in securities fraud, and face charges with massive penalties, both in terms of fines and jail time.
The first step in understanding securities fraud is knowing what securities are. While the exact legal definition is complex, the basic definition of a security is a business arrangement in which someone gets:
- partial interest in a business, or
- the guaranteed repayment of a debt
Some examples of securities are:
- Interest in a limited liability company
Securities fraud is both a state and federal crime, and the laws are designed to protect investors. It is defined as the willfully fraudulent manipulation, sale, or purchase of securities; or the willful violation of the laws governing the buying and selling of securities. Some examples are:
- Insider trading
- Selling unqualified securities
- Misleading activities in the sale or purchase of securities
- False information in the sale or purchase of securities
- Noncompliance with the regulations or agreements in selling qualified securities
Some real-world scenarios are:
- Due to your position in a company, you confidentially hear that the company will be filing for bankruptcy in the coming weeks. You know that the stock will crash, so you short-sell stock in the company and make a considerable amount of money. That is classified as insider trading (using non-public knowledge gained from a special connection to a business to trade in stock of that business) and is classified as securities fraud.
- You are an entrepreneur who wants to create a startup, so you make your pitch and advertise it online, offering interest in the startup in exchange for investment. If you have not done the required paperwork and qualified your stock, you could face charges of securities fraud.
Securities fraud can be charged as either a misdemeanor or a felony, and the penalties are severe. There are two different categories of penalties associated with securities fraud:
- If you willfully sell securities without properly qualifying them or you violate the agreements set in the qualification process, the penalty can be as steep as up to one million dollars in fines and up to three years in prison.
- If you willfully manipulate or make false or misleading statements in buying or selling securities, or engage in insider trading, the penalties can be as extensive as ten million dollars in fines and up to five years in prison.
If convicted of securities fraud, there is also the risk of civil lawsuits where you may be forced to pay damages to the investors harmed.
The best defense is inherent in the definition of securities fraud – the action must have been willful. If it cannot be established beyond a reasonable doubt that the actions were taken intentionally, the charges can be defended on that basis. Due to the complexity involved in this type of charge and the severe penalties that could be imposed, you need a white-collar lawyer on your side.
At Werksman Jackson & Quinn LLP, we understand how easily securities fraud charges can arise, often from simple mistakes, honest errors, poor business arrangements, or false accusations. Defending against these charges requires sifting through massive amounts of paperwork and electronic data to find that one vital piece of evidence that could establish your innocence. When you have our entire team on your side, the investigation will be thorough, and no stone will be left unturned. We have a strong record of success, and you can be confident that your case will be in the hands of true professionals.
Managing partner Mark Werksman was named by Los Angeles Magazine as one of LA’s “top white-collar criminal defense attorneys.” We are here to help you navigate the complex world of white-collar crime if you are facing charges, or under investigation for securities fraud.
Contact us today at (213) 688-0460 to schedule your no-cost initial consultation.
Recent Case Results
- Complete Dismissal of Molestation Charges
Attorney Mark Werksman’s 29 year old client was falsely accused of molesting two neighborhood children and was subsequently charged with felony child molestation, with a significant prison sentence hanging over his head should he be convicted. Instead, at the preliminary hearing Werksman was able to convince the court to grant his client a complete dismissal of any charges.
- Decision Set Aside
Client, a college student in a faulty Title IX case, was awarded $130,000 in attorney fees.
- Probation with No Jail Time for Drug Money Laundering Charge
Wilmington man accused in New York federal court of laundering drug money through the sale of laptop computers. Mark was able to get the case transferred to federal court in Los Angeles, where he convinced the United States Attorney to reduce the charges. His client was sentenced to probation with no jail time on a misdemeanor conviction.