SEC Fraud Defense in Fremont, California

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

The Securities and Exchange Commission (SEC) is legally entrusted with the task of setting the rules for the sale and purchase of securities and other assorted financial instruments. Within its organizational structure, you’ll find its Enforcement Division which, as its name may suggest, performs surveillance duties over individuals, companies, and firms involved in the securities market and oversees compliance with federal securities laws.

The enforcement actions exerted by the SEC in Fremont, California, originate from its San Francisco Regional Office, which essentially has jurisdiction over the northern part of California and its surroundings. If you were ever to be contacted by this office, you shouldn’t hesitate to ask for the assistance of a qualified SEC defense lawyer, such as those at Oberheiden P.C. A timely defense is fundamental for circumventing potential penalties.

The SEC’s Regional Office in San Francisco

The SEC’s main headquarters is located in Washington, D.C., but the agency also branches out to 11 distinct regional offices across the U.S., each one tasked with enforcing SEC rules within a defined radius. The San Francisco Regional Office has jurisdiction over Northern California, Alaska, Idaho, Montana, Oregon, and Washington. As you may be able to infer, this office’s reach spans multiple states in the northwestern part of the U.S. territory.

Representation for Corporate Executives, Other Insiders, and Financial Professionals in All SEC Matters

At Oberheiden P.C., we defend corporate executives, other insiders, and securities professionals against allegations on the part of the SEC. Our firm is determined to resolve cases before they escalate to the courts, as attested by a great majority of our clients.

We understand how difficult, strenuous, and time-consuming it can be to deal with court proceedings and the amount of time it takes for judges to make a definitive ruling. Hence, we take measures to ensure that you won’t ever have to face such hurdles.

Our defense encompasses essentially all kinds of allegations, including (but not reduced to):

Broker-Dealer Fraud

The SEC shows special contempt (and rightfully so) for individuals and legal entities who misrepresent or omit important details about their assets for the purposes of deceiving investors, or who fake their license to trade securities. Several accusations of fraud turn out to be true, but, in some instances, they stem from misunderstandings, errors of fact, or downright false claims. Intent is likewise an important element in a fraud crime, which should be shown beyond a reasonable doubt.

Market Manipulation

Market manipulation can take on multiple forms. These are some examples of actions that can fall under the category of “market manipulation”:

Pump and dump schemes: These tactics involve the spreading of false or misleading information in order to create a buying frenzy and “pump” the price of an asset, only to sell once the price reaches a certain threshold.
Poop and scoop schemes: This is an inversion of the “pump and dump” scam, consisting of the dissemination of negative information about a company or investment so as to tempt holders or traders to sell their positions. This selling pressure will drive the price down (poop) so that the perpetrators can buy at a discount (scoop).
Fictitious trades: This is a very common type of manipulation tactic in which trading volume is artificially inflated with false trades (that entail no actual ownership change) to create a semblance of an interest surge in a stock, luring other traders into placing buy orders.

Market manipulation tactics are often difficult to detect or prove. In many scenarios, people involved in the sale of a security spread misleading information without ill intent, which could be misconstrued as a manipulation attempt.

Insider Trading

Insider trading constitutes a securities law violation since it grants advantages to certain individuals over others on the basis of inside information not disclosed to the general public. The SEC has given special emphasis to these types of breaches, even though there is no clear definition of “insider information”, a situation that could conceivably hurt innocent dealers.

There are several ways to address a claim of insider trading, including the execution of trades pursuant to a pre-arranged plan under Rule 10b5-1, the inability to access insider information, the utilization of useful material public information that was “pieced together”, or reliance on legal counsel.

Trading During Blackout Periods or Mergers

Blackout periods are spans of time during which insiders and executives are barred from trading their company’s stocks. An example of a blackout period is the time frame of a company’s announcement of its quarterly or annual financial results (an event that could severely impact the market for its securities).

Also, during the execution of a merger – the fusion of two existing legal entities into one – insiders of both entities are bound to refrain from trading. The exact moment when the blackout period should begin in this case is far from clear, an issue upon which a good defense could be built.

Potential Penalties Ensuing from an SEC Investigation

The SEC has a broad range of sanctions available, but most of them cannot be enacted without first submitting requests to other competent authorities. If an action deemed offensive by the SEC is of a civil character, it must file a civil lawsuit. In the event that a securities-related crime was committed, the SEC must report this finding to law enforcement agencies for a thorough criminal investigation.

With that said, penalties imposed in the context of an enforcement action by the SEC usually involve payment of copious amounts of money, regardless of whether the punishable conduct entails criminal liability. In many instances, monetary penalties hover around the million or even billion-dollar range, depending on the scope of the violation and the quantum. As can be seen in the agency’s FY21 Enforcement Results, 697 enforcement actions were filed in total, with resulting judgments and orders for approximately $2.4 billion in disgorgement and $1.4 billion in penalties.

The SEC, apart from financial actions, could seek injunctions against individuals or companies, prohibiting them from executing certain activities.

Frequently Asked Questions About SEC Defense in Fremont, California

What Does an SEC Defense Lawyer Do?

An SEC defense lawyer has the responsibility to represent clients and meddle in their affairs with the SEC, providing legal support and even, in some cases, speaking on their behalf. An SEC lawyer also has the duty to devise a defense strategy aimed at defending the client’s interests, finding all possible alternatives to procure a good outcome, provided that the conditions are met. Finally, SEC lawyers also intervene during civil or criminal trials for alleged securities law violations.

What Constitutes a Securities Violation?

A securities violation is an action performed by a securities professional that infringes the provisions set out by U.S. securities laws. An all-encompassing list of securities violations is not provided by any of these laws because of the broad nature of the definitions contained therein, leading therefore to all kinds of indictments. This is justified by the fact that new fraudulent mechanisms arise constantly which would not be able to be pursued with a more restrictive approach.

Who Qualifies as an “Insider” in the Context of Insider Trading Compliance?

An “insider” is a person in a position to receive privileged non-public information that, if made available to the public, could elicit a violent price change in the company’s shares. Executives, in-house lawyers, and high-stakes employees are considered insiders by default, but the definition extends beyond these ranks or positions. For example, business associates and even family members could be treated as “insiders” under certain conditions.

What Is a Pre-Arranged Trading Plan and How Does It Help Against Allegations of Insider Trading?

Rule 10b5-1 was established by the SEC to enable insiders to set up trading plans for the stocks they own. Under this paradigm, a holder who falls within the category of “insider” can sell a defined number of shares at specific predetermined times. These pre-arranged plans (or Rule 10b5-1 plans) must contain certain information for their validity, including:

The specified number of shares or securities to be sold, along with price and date;
A written algorithm for determining amounts, prices, and dates; or
The express willingness to grant the broker the exclusive right to determine when the sales or purchases should be executed, provided that the broker does so without being in possession of material non-public information.

With this plan, company executives and other insiders can evade insider trading charges since the orders that were executed could not be said to be motivated by insider information, but by a plan already set into motion before any information was made available within closed doors.

Seek an Appointment with a Fremont SEC Defense Lawyer at Oberheiden P.C.

An SEC defense lawyer is a great ally in your legal clashes with the SEC. At Oberheiden P.C., we put special care into mounting a defense strategy that covers all flanks by following a thorough internal investigation and sifting all possible options.

If you require an SEC defense lawyer in Fremont, California, call us at 888-680-1745 or fill out our contact form, and we will gladly schedule a consultation meeting.