The
object of Securities Fraud, like other forms of white
collar fraud, is to accomplish the desired result
by concealment, deception, trickery, or dishonesty
Corporate
or business fraud is a financial crime that since
May 27, 1993, has been statutorily regulated. Federal
law violations under today’s statutes include:
1. Buying
or selling securities not registered with the SEC
(Securities and Exchange Commission)
2. Insider trading
3. Filling documents with the SEC that deliberately
contain false statements or omissions of fact.
4. Communicating interstate with prospective purchases
of securities, where the communications employ a
scheme, a device, or contain false statements or
artifice to defraud, or ommisions of fact that are
calculated to mislead.
To be
convicted of securities fraud an Assistant United
States Attorney (AUSA) must prove beyond reasonable
doubt when presented to a jury or judge:
The defendant’s
acts were, or their failure to disclose was, in
correlation with the purchase or sale of securities.
The defendant use a scheme or device to defraud
someone, failed to disclose a material fact, made
an untrue statement of a material fact which, resulted
in making the defendants statements misleading
The defendant used telephone or mail in conjunction
with these acts or failure to disclose
The sole purpose of the defendant’s actions
was to defraud buyers or sellers of securities.
The
Court’s interpretation of Security Fraud Violations
Securities
fraud conviction can be reached if false or misleading
statements are employed to secure a proxy. United
States v. Pope, 189 F. Supp. 12, 16-7 (S.D. NY 1960).
Fraudulent intent can be inferred from the facts
and circumstances surrounding a defendant’s
actions and does not need to be proved directly.
(United States v. Flynn, 196 F.3d 927, 929 (8th
Cir. 1999).
The government must show the defendant had intent
to manipulate, defraud or deceive, though it doesn’t
need to prove the defendant intended to cause harm
to the victim of the fraud, to convict the defendant
of securities fraud.
Possible Punishment
If found
guilty of a felony, the sentence is typically up
to 10 years and a fine of $1 million dollars. Corporate
securities fraud may be fined up to $2.5 million
Often, the prosecuting AUSA will not only charge
the defendant with securities fraud, but also wire
fraud, mail fraud, bank fraud, money laundering,
RICO crimes and conspiracy to commit the before
mentioned crimes. It should be noted that parole
in the Federal System has been abolished since 1987
and that removal of the conviction from public records
(expungement) is not available.
|
Previous