SEC Fraud Defense Lawyers for Businesses, Corporate Executives, and Other Insiders in Santa Clara, California
SEC Defense Team Lead
Former DOJ Trial Attorney
Santa Clara has been a site of interest for the U.S. Securities and Exchange Commission (SEC) for a very long time, mostly due to the number of high-ranking tech companies and startups headquartered in the area.
4500 Great America Pkwy
Santa Clara, CA 95054
The SEC’s reach stretches beyond a company’s activities, also encompassing the practices of individual company executives and insiders. The SEC is in charge of supervising regulatory compliance on the part of both publicly traded and privately held companies, as well as assessing potential administrative, civil, and even criminal liability of subjects allegedly incurring securities law breaches, oftentimes in tandem with the Department of Justice and the United States Attorney’s Office.
At Oberheiden P.C., we may be able to help individuals and companies deal with SEC matters, as many of our senior attorneys have an extensive background in securities fraud cases. Getting legal defense in a timely manner could considerably tilt the scales in your favor.
Our staff can represent executives and insiders who are under investigation by the SEC. They have a proven track record of solving a considerable majority of conflicts between clients and the SEC without the need on the part of the enforcement agency to file any charges or to remit the matter to other authorities. Nevertheless, their expertise goes beyond managing cases at their initial investigative phase, excelling also in representation and litigation skills within the context of securities fraud trials and other related topics.
In terms of SEC defense practices, we’re able to defend corporate executives and other insiders in Santa Clara, California who face, among others, the following allegations or charges:
Corporate executives and other insiders are forbidden from buying or selling shares of a company on the basis of non-disclosed (or “inside”) information about the security, in light of current federal securities laws. These violations are done by breaching fiduciary duty and trust, undermining investor confidence in the integrity of the securities market.
Depending on the nature of the allegations – ultimately hinging on intent – the SEC could file civil charges or transfer the case to a criminal enforcement agency. In each case, a defense strategy is devised in which relevant facts and relevant law are carefully pondered. In many instances, insiders could circumvent any semblance of liability, regardless of the circumstances involved, by showing that they traded in accordance with a “pre-arranged plan” as defined by SEC Rule 10(b)5-1.
Trades during Blackout Periods
Unless abiding by a “pre-arranged plan” or another exemption, insiders are not allowed to execute trades during blackout periods, as in, periods during which certain actions are denied or limited. To illustrate, a company’s announcement of its quarterly or annual financial results could impact the market conditions for its securities, in which case, the appearance of trading in awareness of material nonpublic data ought to be avoided. Moreover, other events material to the company and known only by a few high-ranking personnel (directors or executives) could potentially constitute blackout periods as well.
In these cases, the defenses are roughly similar to those asserted for insider trading allegations.
Trades Using Family Members
Executives and insiders are prohibited from using their family members to execute trading orders that they’re legally unable to execute themselves. The defense strategy would have to focus on two key questions, to wit:
- What information was disclosed to the family member (if any)?
- Did this information prompt the family member to execute the trade?
In this scenario, both the family member and the company insider or executive could potentially face charges.
The Sale of Unregistered Securities
Selling shares and stocks without first registering them with the SEC – or without an exemption from doing so – is a punishable offense that could trigger legal actions on the part of the agency.
Notwithstanding, ascertaining whether a sale constitutes an “investment contract” – and, therefore, bound to SEC laws – can become a complex endeavor. In an effort to establish a uniform criterion, the U.S. Supreme Court adopted the “Howey Test” in 1946 which, in modern times, has generated a bit of controversy, especially with regard to cryptocurrencies.
Market manipulation refers to the tactics employed by financial professionals and high-ranking company executives or insiders in order to affect the price action of the company’s stock for their own profit. Typical pursuable activities include “pump and dump” schemes and the spreading of seemingly false information about the company so as to elicit a certain price movement.
No violation is incurred when the information, albeit false or misleading, is transmitted in good faith. The plaintiff (in this case, the SEC) would need to demonstrate that the intent was to purposefully spread misinformation with the goal of manipulating the market.
Potential Penalties Resulting from an SEC Enforcement Action
The SEC could conclude, after an inquiry phase, that a given action performed by a company or its executives/insiders could be regarded as a punishable offense. This offense could be of a civil, administrative, and/or criminal nature.
Depending on the type of breach, the SEC’s Enforcement Division could either execute an administrative action or file a civil complaint. If the agency is aware of a possible criminal offense, it would have to forward this finding to the pertinent federal authorities (such as the FBI) so that a criminal investigation may ensue.
Regardless, in most cases, penalties resulting from an enforcement action on the part of the SEC would involve sums of money. These sums are overwhelmingly large in many cases, bordering millions or even billions of dollars. According to the agency’s FY21 Enforcement Results, the agency filed 697 total enforcement actions (a 7% increase over the previous year), resulting in judgments and orders for approximately $2.4 billion in disgorgement and $1.4 billion in penalties.
The SEC, apart from financial actions, could seek judicial orders to ban individuals or companies from performing certain types of behavior, lest they incur contempt of court and serve jail time accordingly.
Frequently Asked Questions About SEC Defense in Santa Clara
What Does the SEC Consider to Be Fraudulent Conduct?
The SEC describes fraud as a deliberate misrepresentation or omission capable of misleading an investor. This is an astoundingly vague definition that allows the SEC to trigger its enforcement actions in a wide variety of situations. While this vagueness supposedly serves the purpose of eluding bad actors from finding novel ways to trick investors, it could also end up being overly arbitrary and hurt brokers and securities professionals who otherwise operate in good faith.
What Can Trigger an SEC Investigation?
An SEC investigation can be triggered in myriad ways, including:
- Information delivered by whistleblowers (who consequently get rewards and protection)
- Discrepancies in the data contained in the company’s public statements or filings
- Collaboration efforts by other enforcement agencies, such as the Internal Revenue Service (IRS)
- Complaints made by investors
- Market surveillance activities
- Media reports
What Constitutes a Securities Violation?
Securities violations can be committed in a broad number of ways, owing also to the SEC’s rather ambiguous definition of fraud and the extraordinary amount of securities legislation applicable at a federal level.
Why Should I Choose Oberheiden P.C. for SEC Defense in Santa Clara?
Our defense lawyers have vast amounts of experience handling high-stakes federal matters. This experience was earned, not only by way of representing individuals or companies but, in various instances, by working for the federal agencies themselves, which means that they have extensive knowledge about what transpires on both sides of these controversies.
What to Do If You Are Under Investigation by the SEC
If you were notified that you’re being investigated by the SEC, the best course of action is to hire a competent securities litigation lawyer. The lawyers at Oberheiden P.C. can offer legal guidance and perform an internal review to determine how exposed you are to civil, professional, or criminal charges. This review will also serve to delineate the chances of a positive outcome and how to best tackle and overcome the legal hurdles you’ll face during the process.
The Santa Clara securities litigation lawyers at Oberheiden P.C. have a remarkable trajectory in assisting a great number of securities professionals and firms when it came to protecting their interests amidst an SEC investigation or trial. Since we have knowledge about the ins and outs of these proceedings, we are more than qualified to give practical advice and perform actions that should forestall the investigation entirely when the correct conditions are met, or to resolve the issue – or alleviate the sanctions – if the case were to escalate to the courts.
If you think you may be under the eye of the SEC, you should not wait any longer. Contact us online or call our office at 888-680-1745 for free consultations with no strings attached. We attend queries during normal business hours and on weekends too. We also guarantee absolute confidentiality in our correspondence.