Securities Fraud Defense Attorneys in Washington, DC
Securities fraud is one of the most aggressively prosecuted areas of federal law, investigated by agencies including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Industry Regulatory Authority (FINRA). These cases often involve complex financial transactions, high-volume trading, and intricate regulatory requirements.
Because of the technical nature of the securities markets, allegations of securities fraud frequently arise from misunderstandings, market fluctuations, or ambiguous compliance standards—not deliberate wrongdoing. Still, the consequences of a securities fraud investigation can be severe, including significant fines, injunctions, loss of licenses, and federal imprisonment.
What Is Securities Fraud?
Securities fraud generally involves allegations of misrepresentation, market manipulation, or deceptive practices related to the buying, selling, or offering of securities. These cases often arise in the context of stocks, bonds, investment contracts, digital assets, and other financial instruments. Unlike many other types of fraud, securities fraud may involve both criminal charges and civil enforcement actions by regulators. Common scenarios include:
- Misleading investors about company performance
- Providing inaccurate financial statements
- Manipulating market prices
- Insider trading (trading on material non-public information)
- Fraudulent investment schemes
- Misrepresentations during securities offerings
- Misuse of client assets by brokers or advisors
Common Allegations in Securities Fraud Cases
Securities fraud investigations often center on specific conduct that regulators view as misleading, deceptive, or manipulative. Examples include:
Material Misrepresentations or Omissions. Accusations that a company or individual failed to disclose important information or provided false statements in:
- Financial filings
- Prospectuses
- Press releases
- Investor communications
- Token offerings or ICOs (in digital asset markets)
Insider Trading. Trading based on material, non-public information. Insider trading cases often focus on:
- Corporate executives
- Employees with confidential access
- Friends or family of insiders
- Professionals (lawyers, brokers, bankers) who received information illegally
Market Manipulation. This may include:
- Pump-and-dump schemes
- Spoofing or layering
- Wash trading
- Coordinated market activity to artificially alter price movements
Investment Advisor or Broker-Dealer Misconduct
- Churning (excessive trading to generate commissions)
- Unauthorized trading
- Misuse of client funds
- Unsuitable investment recommendations
Fraudulent Securities Offerings. Often involving startups, private placements, or crypto tokens. These cases frequently depend on complex financial records and expert analysis.
What Are the Statutes Used to Prosecute Securities Fraud?
Securities fraud can be charged under several federal criminal and civil statutes. Some of the most common include:
Section 10(b) and Rule 10b-5 (Securities Exchange Act of 1934). A broad prohibition against fraudulent or deceptive conduct in connection with the purchase or sale of securities.
18 U.S.C. § 1348 – Securities Fraud. The primary criminal securities fraud statute, modeled after wire fraud. Penalty: up to 25 years in prison.
Mail and Wire Fraud Statutes (18 U.S.C. §§ 1341, 1343). Frequently used to prosecute investment schemes or misrepresentations. See our mail and wire fraud page.
Insider Trading Statutes. Often charged under § 10(b), Rule 10b-5, and related civil provisions.
Sarbanes-Oxley Act (SOX) Violations. Includes false certification of financial reports and destruction of records.
False Statements (18 U.S.C. § 1001). Used when the government claims inaccurate information was submitted to regulators.
Securities Act of 1933 – Section 17(a). Covers fraudulent offerings and misleading statements to investors.
Money Laundering (18 U.S.C. §§ 1956, 1957). Added when the government alleges proceeds of securities fraud were moved or concealed. See our money laundering page. Penalties may include imprisonment, substantial fines, restitution, forfeiture, SEC injunctions, and industry bans.
How Does a Securities Fraud Investigations Begin?
Securities investigations may originate from various sources, including:
- SEC or FINRA Examinations. Routine regulatory exams often uncover irregularities that lead to enforcement actions.
- Whistleblower Complaints. The SEC’s whistleblower program incentivizes individuals to report suspected wrongdoing, sometimes triggering large-scale investigations.
- Market Surveillance. Both the SEC and FINRA continuously monitor trading patterns for signs of manipulation.
- Investor Complaints. Dissatisfied investors may file grievances that lead to audits or inquiries.
- Parallel Criminal Investigations. In many cases, the SEC and DOJ investigate simultaneously. It is crucial to understand that statements made in civil investigations may be used in criminal proceedings.
Pre-Indictment Representation
Early intervention can significantly influence the direction of a securities fraud case. Before charges are filed, an experienced criminal defense attorney can:
- Communicate with SEC and DOJ prosecutors
- Guide clients through interviews and subpoenas
- Prevent the sharing of information that may lead to criminal exposure
- Limit or narrow the scope of investigations
- Potentially prevent criminal charges altogether
If you have received a Wells Notice, subpoena, or target letter, or if investigators have contacted you, speak with counsel immediately. See Should I Speak to Law Enforcement?
Federal Securities Fraud Defense Attorneys
Securities fraud investigations can threaten careers, finances, and freedom. You need a legal team that understands both the financial markets and federal criminal procedure.
At Burnham & Gorokhov, PLLC, we defend individuals and companies facing securities fraud investigations, insider trading allegations, regulatory enforcement actions, and parallel civil-criminal proceedings. In many cases, we have successfully resolved matters without charges ever being filed.