San Francisco Securities And Investment Fraud Defense Lawyers

The Securities and Exchange Commission (SEC) has a powerful enforcement division that focuses on identifying any party, corporation, corporate executive, investment professional, or individual they believe has engaged in committing financial crimes. The SEC focuses on identifying fraudulent investment schemes and constantly monitors social media and other types of cyber communications for “red flags.”

The indicators they look for include promises of guaranteed financial gains, risk-free investments or posts about special stock picks, all of which are scrutinized by the agency. Some of the common investment scams that can lead to criminal charges for securities or investment fraud include:

• Fraudulent unregistered offerings: A company is restricted from the sale of securities unless the transaction is registered with the SEC or has an exemption. An investment fraud case may be filed if the SEC believes that unregistered offerings are sold as part of an investment scam.
• Charitable investment fraud cases: Some investment fraud charges are related to investments offered by a charity.
• Community-based financial fraud: Some investment fraud cases are termed “community-based,” as they target certain types of groups, such as ethnic groups, people with a common nationality, religion, sexual orientation, military service or age.
• Broker fraud: Securities fraud cases are filed under Section 10b of the Securities Exchange Act of 1934, Rule 10b-5. These laws prohibit manipulative or deceptive contrivances in the buying or selling of any security. A broker may be charged with securities fraud if it is alleged that trades were made without authorization, the recommendation of investments that do not match the financial condition of the investor or allegations that a broker engaged in “churning,” in which trades were performed unnecessarily to generate higher commissions for a broker.
• Insider trading: An accusation of insider trading will be based on the belief that stocks were bought or sold due to insider information that was not made available to the general investing public.
• “Pump and dump” or market manipulation schemes: When a stock is touted on the marketplace or by mass calling from a boiler room, causing an increase in stock prices, after which the alleged perpetrators sell a penny stock, or “microcap stock,” leaving investors with massive financial losses when the stock price plummets.

Accused Of Committing Securities Or Investment Fraud?

If you or your business is currently under investigation by the SEC, or charges have been filed, you are about to be involved in a very complex area of the legal system. Several types of investigations are performed by SEC investigators:

Informal Investigation

This is generally the initial stage of an SEC investigation and is based on the cooperation of individuals rather than being supported by subpoena power. These investigations are also termed MUI or “matter under inquiry.” These investigations must be handled carefully, and if you are asked to be interviewed by an SEC investigator, ensure you are protected by counsel.

Formal Investigation

A formal investigation is more serious, with subpoenas issued. The SEC has almost unlimited powers in these investigations. These investigations often lead to enforcement action.

Wells Notice Issued

If enforcement action is to be initiated, the defendant will be notified by what is termed a “Wells Notice,” which will inform you of the intention to initiate an enforcement action. You will be given one month to respond to the Wells Notice. It is imperative that you have the guidance of a skilled, experienced defense attorney before responding to any such notice.

Enforcement Actions

SEC enforcement actions take the form of either a civil action filed in federal court or an administrative proceeding, based on the crime’s perceived severity.

Potential Consequences

If you are found to have committed investment or securities fraud, you may face very severe penalties, including:

• Asset freezes
• Civil fines as high as $5 million
• Penalties
• Incarceration in federal prison for up to five years per offense
• Probation
• Restitution paid to investors
• Loss of license

These consequences can have long-lasting financial, professional and personal effects, affecting not only your career and finances but also your reputation and future opportunities.

Frequently Asked Questions

If you are dealing with an SEC or DOJ inquiry, it is understandable to feel scared and unsure of what may come next. The stakes can feel high, but the best first step is to stay calm and seek qualified legal advice as early as possible.

What is the difference between an SEC civil action and a DOJ criminal prosecution?

An SEC civil action and a DOJ criminal prosecution are different in purpose, process and potential consequences. The SEC is a civil regulator whose cases seek remedies like injunctions, disgorgement, civil penalties, industry bars or administrative sanctions. The Department of Justice brings criminal cases that can lead to fines and, in serious cases, imprisonment.

What should I do if I receive a subpoena from the SEC San Francisco Regional Office?

If you receive a subpoena, take it seriously and act with urgency. Read the legal order carefully, check the deadline and do not ignore it or try to “explain things away” informally. Preserve all potentially relevant documents, emails, texts and chat messages, and make sure no information is deleted or altered. It is also vital to contact a securities defense attorney immediately because they can help assess your obligations, communicate with the SEC and protect you from making avoidable mistakes.

Can I be charged with securities fraud even if I did not intend to deceive anyone?

The absence of an intent to deceive does not automatically eliminate risk. Many fraud charges are based on scienter, or “the intent” to deceive, manipulate, or defraud, but some SEC claims can also involve reckless conduct or specific compliance failures that support liability even without a direct intent to lie. The exact standard will depend on the statute, the type of proceeding, and whether the case is civil or criminal.

Will I lose my securities license if I am investigated by the SEC?

Being investigated by the SEC does not automatically mean you will lose your securities license, but it can put it at risk. If the SEC files charges, or if a self-regulatory organization or employer takes action, you could face suspension, limitations, termination or a bar depending on the outcome.

Even an investigation can create disclosure obligations and reputational issues. The exact impact on your license will depend on the allegations, the ultimate findings and any settlement terms.

Contact Hickey & Chung, LLP, Today

If you are under investigation, whether informal or formal, or have been charged with securities or investment fraud, the outcome of the case can change your life forever. A conviction can damage your professional standing and lead to severe financial losses or incarceration. These are serious legal problems that require the assistance of a top-rated defense lawyer.

You can trust that our skilled defense attorneys will take every action to mitigate the damage and seek the best possible outcome based on the facts in your case. To discuss your situation with us, call our San Francisco law office today at 415-484-4547 or send us a confidential email.