Securities Fraud – SEC Defense Lawyer

Last Updated: 2023-03-02

Nick Oberheiden: SEC Fraud Defense Attorney

The Enforcement Division of the Securities and Exchange Commission (SEC) pursues a broad range of charges against companies, company executives, investment advisors, and other entities and individuals. If you have been contacted by the SEC’s Enforcement Division, it is important that you seek the best federal securities fraud defense counsel immediately.

Attorney John W. Sellers
SEC Defense Team Lead
Former DOJ Trial Attorney

While most people know the Securities and Exchange Commission (SEC) as the federal agency responsible for regulating the public securities market in the United States, the SEC conducts law enforcement activities as well. In particular, its Enforcement Division investigates and prosecutes companies and individuals for a broad range of offenses, and has the authority to seek penalties in administrative, civil, and criminal proceedings.

Regardless of the nature of the investigation, if your company or you personally are being targeted by the SEC, you need to defend yourself. The penalties for violating the Securities and Exchange Act of 1934, the Dodd-Frank Act, the Foreign Corrupt Practices Act (FCPA), and other statutes falling within the SEC’s enforcement jurisdiction can be substantial, and criminal prosecution by the U.S. Department of Justice (DOJ) can lead to long-term imprisonment. The SEC routinely issues litigation releases announcing civil charges, securities litigation, and sentences against company executives, investment advisors, scam artists, and other individuals, and DOJ press releases regularly tout criminal enforcement efforts in the securities field.

Proven Securities Fraud Lawyers for Serious Matters

At Oberheiden, P.C., our proven federal securities defense lawyers provide skilled legal representation for securities fraud enforcement matters. Our practice is nationwide in scope, and our career defense attorneys and former DOJ white-collar prosecutors have collectively handled thousands of federal cases at all stages – from investigation through appeal. If the SEC is targeting you or your company for administrative or civil enforcement, or if the SEC is working with the DOJ to pursue criminal securities fraud charges, we can use our experience to protect you.

SEC Fraud Defense Law Firm

Securities Fraud Enforcement: Five Core Principles and a “Diverse Mix” of Enforcement Activity

In a press release announcing the publication of the SEC Enforcement Division’s 2019 Annual Report, the SEC confirmed that it is continuing to target its securities fraud enforcement efforts based on five core principles. These five core principles are:

Focus on the Main Street investor,
Focus on individual accountability,
Keep pace with technological change,
Impose remedies that most effectively further enforcement goals, and
Constantly assess the allocation of resources.

Guided by these principles, the SEC brought a “diverse mix” of enforcement actions during fiscal year 2019. As summarized in the SEC’s press release:

“In fiscal year 2019, the SEC brought a diverse mix of 862 enforcement actions, including 526 standalone actions. These actions addressed a broad range of significant issues, including issuer disclosure/accounting violations; auditor misconduct; investment advisory issues; securities offerings; market manipulation; insider trading; and broker-dealer misconduct. Through these actions, the SEC obtained judgments and orders totaling more than $4.3 billion in disgorgement and penalties. Importantly, the SEC also returned roughly $1.2 billion to harmed investors as a result of enforcement actions.”

On average, this translates to nearly $6.4 million in disgorgement, penalties, and restitution per SEC fraud enforcement action. But, in large-scale civil and criminal investigations, it is not unusual for the SEC and DOJ to seek tens or hundreds of millions of dollars in total penalties.

Securities Fraud Defense Lawyer: What to Do if You’ve Been Accused

SEC Fraud Defense: Common Allegations in SEC Fraud Investigations

As you can see from the five core principles listed above, the SEC devotes a significant portion of its enforcement efforts to targeting individuals and companies suspected of having direct involvement in fraudulent practices that harm individual investors. However, this itself is an extraordinarily broad category of fraud-related offenses, and the SEC’s focus on technology and allocation of resources means that we are often able to identify trends in securities fraud enforcement from year to year. For example, recent focuses of SEC, DOJ, and other federal agency law enforcement efforts have included:

Cryptocurrency Fraud – From blockchain investment scams to fraudulent initial coin offerings (ICOs), the SEC is actively targeting various types of fraudulent practices involving Bitcoin and other cryptocurrencies. This is an evolving area of the law, and in many cases the existing securities laws are not well-equipped to address cryptocurrency-related issues.
Cannabis and CBD Investment Fraud – Cannabis and CBD investments are also high on the SEC’s radar. In addition to SEC enforcement measures, companies targeted in cannabis and CBD-related investigations are frequently facing allegations of money laundering and other related charges as well.
Mobile Trading and Investing Apps – On the technology side, mobile trading and investing apps are facing close scrutiny from the SEC. From tech startups to large Wall Street investment firms, all types of companies are releasing apps that are subject to a bevy of federal securities laws and regulations, and even unintentional oversights can lead to fraud allegations. This is particularly true in cases where regulatory and statutory violations create a risk of financial loss for app users.
Social Media Solicitations – While mail and email solicitations are still the root cause of many SEC fraud investigations, increasingly, the SEC is investigating companies and scam artists that target investors through social media. The same rules that apply to mail and email solicitations apply to social media solicitations as well, and companies and individuals that fail to comply with SEC marketing rules can face steep penalties.
High–Tech and Biomedical Investment Scams – With the current rate of technological advancement, high-tech and biomedical investment scams have also garnered the SEC’s and DOJ’s attention in recent years. Companies offering investment opportunities linked to next-generation innovations must be extremely careful to ensure compliance with all applicable SEC filing, registration, and exemption requirements.

More generally, practices that are likely to lead to SEC fraud investigations include:

Misrepresentation or Omission of Material Information – The requirement for companies and investment advisors to provide complete and accurate information to investors is a foundational principle of the federal securities law regime. Misrepresentation and omission of material information are among the most common allegations in SEC fraud investigations.
Manipulation of the Market Price of Securities – Allegations of market manipulation can take a variety of different forms, from allegedly withholding or delaying the release of material information to perpetrating “pump and dump” schemes that reap substantial profits while resulting in substantial losses for other investors. In all cases, successfully fending off allegations of market manipulation requires the advice and representation of experienced federal defense counsel.
Theft of Customer Funds or Securities – Theft of customer funds and theft of securities are common allegations against advisory firms and individual investment advisors. Similar to other forms of SEC fraud, these allegations can take several different forms, from diversion of customer deposits to unauthorized trading, and from churning customers’ accounts to charging excessive commissions.
Broker–Dealer Fraud – Allegations of broker-dealer fraud often fall into one of the categories listed above. The SEC works closely with the Financial Industry Regulatory Authority (FINRA) and other governing bodies to regulate and enforce broker-dealers’ statutory and regulatory obligations.
Insider Trading – Although it does not grab mainstream headlines like it used to, insider trading is still a top fraud enforcement priority for the SEC. The SEC regularly pursues administrative, civil, and criminal enforcement action against company insiders, tippers, and tippees who unlawfully take advantage of material non-public information.
Sale of Unregistered Securities – While there are several exceptions to the federal securities registration requirements, executing a sale prior to securing an available exemption constitutes SEC fraud. We represent individuals and corporate clients in cases involving allegations of failure to secure registration exemptions as well as the fraudulent sale of securities that are required to be registered with the SEC.
Embezzlement and Financial Fraud – Embezzlement, accounting violations, and other forms of financial fraud are common allegations in SEC fraud cases as well. While it is possible for these types of allegations to trigger investigations involving the SEC’s Enforcement Division, in many cases these allegations will flow from evidence uncovered during the investigative process.

SEC Compliance from Oberheiden P.C. Attorneys

Due to the volume and diversity of potential charges in SEC fraud investigations, when faced with the prospect of an administrative, civil, or criminal enforcement action, it is imperative to quickly discern the specific allegations for which you and your company are being targeted. At Oberheiden, P.C., we have the federal government insights and federal defense experience required to efficiently assess the potential exposure resulting from SEC inquiries and develop targeted defense strategies focused on securing favorable pre-charge resolutions. As with all federal defense matters, acting promptly is crucial to affording yourself the opportunity to present the strongest possible defense. To speak with an SEC fraud defense lawyer at Oberheiden, P.C. in confidence, call or contact us online today.

FAQs: Facing Allegations of Securities Fraud from the SEC

What Triggers an SEC Fraud Investigation?

Several different factors can trigger an SEC fraud investigation. In many cases, the SEC will initiate an investigation unilaterally based on information (or a lack of information) contained in a company’s public statements or filings. Whistleblower allegations are also common triggers, and the SEC’s whistleblower program has made record payouts in recent years.

SEC fraud investigations can also flow from other federal agencies’ investigative and law enforcement efforts. For example, if the DOJ, FBI or IRS uncovers possible evidence of securities fraud, it may share this information with the SEC so that the Commission can lend its expertise.

How Does the SEC Define Fraud?

The SEC defines fraud as any misrepresentation or omission that has the potential to affect an investor’s decision-making process. Within this broad definition, fraud can take numerous different forms, from companies publishing false financial guidance to corporate executives engaging in insider trading, and from brokers providing bad advice to scam artists fleecing unsuspecting cryptocurrency investors. While fraud can involve intentional deceit, evidence of intent is not necessary for the SEC to establish fraud in all cases.

How Does the SEC Investigate Securities Fraud?

The SEC uses various tools to investigate cases of suspected securities fraud. One of its most potent investigative tools is its subpoena power. The SEC can issue subpoenas to suspects, targets, and witnesses when conducting formal investigations, and subpoena recipients must respond under penalty of perjury and at the risk of being held in contempt for failing to submit a timely and compliant response.

SEC staff also review documents, conduct interviews, make informal record requests, and gather information through a variety of other investigative means. When facing an SEC fraud investigation, understanding how the SEC investigates—and knowing how to respond appropriately—is critical for mitigating any potential negative consequences.

What Constitutes an SEC Violation?

Many different acts and omissions can constitute SEC violations. The SEC enforces numerous federal securities laws, and it has promulgated voluminous regulations under these laws with which companies, executives, directors, brokers, and others must comply. Failure to strictly adhere to any of these laws or regulations has the potential to lead to allegations of an SEC violation—which can in turn lead to administrative enforcement action, civil litigation, or criminal prosecution.

What Penalties Can the SEC Impose for Securities Fraud?

The SEC’s authority to impose penalties on companies and individuals is substantial. The SEC can (and regularly does) impose civil fines, and it is not unusual for SEC fines to be in the tens of millions or even hundreds of millions of dollars. The SEC can also order disgorgement, payment of interest, and other financial penalties; and, in relevant cases, it can prohibit companies from offering securities, ban individuals from the securities industry, and seek other forms of injunctive relief. In cases involving evidence of criminal securities fraud, the SEC can engage the DOJ to pursue criminal prosecution of both companies and individuals.

Speak with an SEC Defense Attorney at Oberheiden, P.C. about Your SEC Fraud Investigation

Have you been contacted by the SEC’s Enforcement Division or an agent from any other SEC office or division? If so, our securities fraud defense attorneys can help you understand your situation and make informed decisions going forward. To discuss your case in a complimentary and confidential consultation, call us at 888-680-1745 or tell us how we can help online now.

DOJ & SEC Defense Services Offered by Dr. Nick Oberheiden & Oberheiden, P.C.

Geographic Areas

SEC Headquarters

U.S. Securities and Exchange Commission
100 F St NE
Washington, DC 20549

SEC Regional Offices

Regional offices of the SEC:

Atlanta Regional Office
950 East Paces Ferry Rd NE, Suite 900
Atlanta, GA 30326
404-842-7600

Boston Regional Office
33 Arch Street, 24th Floor
Boston, MA 02110
617-573-8900

Chicago Regional Office
175 W. Jackson Boulevard, Suite 1450
Chicago, IL 60604
312-353-7390

Denver Regional Office
1961 Stout Street, Suite 1700
Denver, CO 80294
303-844-1000

Fort Worth Regional Office
801 Cherry Street, Suite 1900, Unit 18
Fort Worth, TX 76102
817-978-3821

Los Angeles Regional Office
444 South Flower Street, Suite 900
Los Angeles, CA 90071
323-965-3998

Miami Regional Office
801 Brickell Ave., Suite 1950
Miami, FL 33131
305-982-6300

New York Regional Office
100 Pearl St., Suite 20-100
New York, NY 10004-2616
212-336-1100

Philadelphia Regional Office
1617 JFK Boulevard, Suite 520
Philadelphia, PA 19103
215-597-3100

Salt Lake Regional Office
351 S. West Temple St., Suite 6.100
Salt Lake City, UT 84101
801-524-5796

San Francisco Regional Office
44 Montgomery Street, Suite 2800
San Francisco, CA 94104
415-705-2500

Securities Fraud – SEC Defense Lawyer

Nick Oberheiden: SEC Fraud Defense Attorney

Put our highly experienced team on your side

Dr. Nick Oberheiden

John W. Sellers

Joanne Fine DeLena

Joe Brown

Amanda Marshall

Aaron L. Wiley

Roger Bach

Michael Koslow

Chris Quick

Kevin M. Sheridan

Ray Yuen

Dennis A. Wichern