Securities Litigation Attorneys
The Oberheiden Law Group has substantial experience in prosecuting and defending securities litigations. Throughout our careers, we have advised hundreds of clients in connection with federal and state securities laws and successfully represented companies, officers, directors, issuers, brokers, business owners, investment advisers, lawyers, accountants, financial and estate planners in courts across the country. We have an exceptional track record with respect to the following claims.
- Investment Fraud (Securities Fraud)
- Breach of Fiduciary Duties
- Sales Practice Violations
- Breach of Contract
- Insider Trading
- Criminal Misconduct
Securities law is among the most complex and most sanctioned areas of law. Companies and business owners simply cannot afford to lose a securities litigation, but must rely on experienced attorneys that vigilantly guard and pursue their interests. The Oberheiden Law Group is a team of former Department of Justice prosecutors and well-respected litigation attorneys that clients from across the United States trust to handle litigation, to conduct internal audits, and to defend against fraud allegations.
Common Claims in Securities Litigation
To fully understand the exposure faced by both investors and brokers, it is necessary to go back in history. Today’s rules governing the issuance of securities, sales practices, and ethical standards are products of the Securities Act of 1933 and the Securities Exchange Act of 1934. Both statutes were direct legislative responses to the stock market crash of 1929 and the Great Depression, and were enacted with the goal of maximizing the protection of every investor by requiring that issuers of securities fully disclose all material information that a reasonable person would need to make a decision about whether or not to invest in that particular security. Financial fraud, misrepresentations, and breach of fiduciary duties present severe allegations that can ruin a company’s reputation and stock value. Fraud in connection with securities and other types of investments may also raise attention from government regulators, including the U.S. Attorney’s Office, the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC), and the Financial Industry Regulatory Authority (FINRA), as well as state banking and insurance regulators. The following is a summary of the most common claims made in securities litigation.
Because fraud, unlike contractual breaches or merely negligent misrepresentations, contains an element of intentional conduct, the claim of fraud is more often made than proven. Moreover, in most states and under federal law, and in contrast to other causes of action, fraud must be pled with particularity and not simply by reciting the elements of the offense. That is to say, a claim of fraud must specify the “who, what, when, where and why” of the fraudulent activity. Securities fraud requires a showing of the following elements.
- A material representation of fact;
- That representation was false or untrue;
- The defendant either knew the statement was false or recklessly made the statement as a positive assertion without knowledge of its truth or falsity;
- The defendant made the statement with the intent that it be acted upon by the other party;
- The other party actually took action in reliance upon the defendant’s misrepresentation; and
- The relying party suffered injury from its action in reliance on the false statement.
(2) Breach of Fiduciary Duty
In order to prevail in a breach of fiduciary duty claim, a plaintiff must show by a preponderance of the evidence that:
- The defendant had a fiduciary duty to the plaintiff (as in a partner, agent, trustee, or advisor)
- The defendant breached that duty to the plaintiff through nonfeasance or malfeasance; and
- The breach of duty caused actual harm or damages to the plaintiff.
Fiduciary breaches may occur in a variety of ways. For example, a corporate officer may have a side business that competes with the corporation, therefore violating his or her duty to devote his time and attention to the corporation. A partner in an investment firm could decide to make a purchase on his own behalf rather than bringing the opportunity to his partners, thus usurping a partnership opportunity. Or, a high-level employee or attorney might give a customer or friend confidential information about a future planned merger, or reveal that the company is not likely to make its quarterly income projections, thus acting disloyally to the company and providing insider information.
(3) Criminal Misconduct
As stated before, securities investments are also governed by criminal laws and penalties. Misconduct that amounts to criminal prosecution must be proven by proof beyond a reasonable doubt, rather than by the common civil standard of a preponderance of the evidence. Criminal securities fraud is a broad term used for several types of criminal prosecution, but generally refers to a violation of Rule 10b-5 of Title 17 of the Code of Federal Regulations as promulgated by the Securities and Exchange Commission. That rule states, “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange:
- to employ any device, scheme, or artifice to defraud;
- to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
- to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”
The former federal prosecutors and attorneys of the Oberheiden Law Group have the experience to competently advise clients in securities matters. Call us today and speak with a senior attorney to discuss your situation. Don’t let a situation get out of control and don’t let your opponent threaten or build criminal charges against you.
Damages & Penalties
No company and no business owner can afford to lose in securities litigation. If you are found civilly liable for fraud in the securities arena, you could face the following types of damages:
- Compensatory Damages: Quite literally, these damages are to compensate the plaintiff for the loss incurred as a result of the defendant’s wrongdoing.
- Lost Profits: These damages seek to put the plaintiff in the position he or she would have been if their money had been invested properly. The court may use a model index to calculate the market-adjusted damages or, more rarely, may allow testimony as to what the plaintiff would have made in the market if his or her money had been invested as directed.
- Punitive Damages: These damages are awarded above any amount of compensation awarded and do not necessarily have any relation to the amount lost by the plaintiff. Courts award punitive damages both to punish wrongdoers and to serve as an example to others.
- Litigation Expenses: Losing defendants may be ordered to pay the plaintiff’s attorney’s fees, costs of court, and other expenses of the case (such as expert’s fees or arbitration costs).
Securities Offerings in the Health Care Industry
Securities offerings are commonplace in the health care industry. Physician-owned pharmacies, toxicology laboratories, hospitals, and other syndicated joint ventures are subject to state and federal securities law because of the funding of these projects through investor money. Extra caution is in order when mixing two of the most regulated and most heavily enforced industries. Both, securities and health care law, require special knowledge and understanding as already small mistakes can lead to civil or even criminal investigation.
The Oberheiden Law Group and its team of former federal prosecutors and experienced attorneys offer this experience. Clients from across the country engage our services to protect their business. Specifically with respect to civil and criminal securities litigation within the health care sector, our attorneys have represented investors as well as joint venture businesses in virtually all health care securities areas including physician-investor models, equity ownership in biotech, pharmaceutical, and medical device companies, REITs, partnerships, and other ownership structures.
If you have questions about health care securities arrangement, you should call us to speak to Dr. Nick Oberheiden. Dr. Oberheiden is the principal of the Oberheiden Law Group and he routinely advises clients on the crossroad of health care compliance and securities law.