Who Investigates Securities Fraud?
Our clients often face parallel criminal and/or civil investigations by the U.S. Department of Justice (DOJ) and other government agencies, including the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC).
The DOJ prosecutes “sophisticated economic crime” through its Fraud Section, including its Securities and Financial Fraud Unit (SFF), as well as the Commodity Futures Trading Commission.
In addition to the DOJ Fraud Unit, the DOJ also has a Cybersecurity Unit within its Computer Crime and Intellectual Property Section that investigates securities frauds that occur on the internet.
What is securities fraud?
What types of activity does law-enforcement label as securities fraud?
According to the FBI, the common types of Securities and Commodities Fraud include:
Securities Fraud - Market Manipulation
Market Manipulation, such as artificially inflating the price of stocks so that alleged co-conspirators can sell their shares at a profit (also known as “pump and dump” schemes).
Securities Fraud - High-Yield Investment Fraud
High Yield Investment Fraud, such as offering low or no risk investments that guarantee unusually high rates of return.
This type of fraud includes Ponzi Schemes (where there is no real investment and payments are paid to early investors to help make it look real) and Pyramid Schemes (where victims are induced to recruit other potential victims through the payment of recruitment commissions).
Securities Fraud - Advance Fee Schemes
Advance-Fee Schemes, where investors are persuaded to advance relatively small sums of money in order to be able to participate in a lucrative investment opportunity.
Securities Fraud - Hedge Fund Fraud
Hedge Fund Fraud, where the government alleges that the fund’s assets are overstated, and where there is the misappropriation of assets, miscalculation of fund manager performance fees, trading on insider information, market timing, or late trading.
Commodities Fraud, including investments in precious metals or commodities sold based on fraudulent sales pitches claiming high rates of return.
Foreign Exchange Fraud
Foreign Exchange Fraud, including when foreign currency trading firms use false claims to induce investment in the spot foreign currency market.
Broker Embezzlement, such as when a broker is accused of forging investor checks or transferring funds or securities without authorization.
Late-Day Trading, which is the purchase, sale, or client allocation of securities after market close.
A scheme where it is alleged that the broker kept profitable trades for himself and to the detriment of his clients.
Securities Fraud and Cybercrime
The federal government is also equipped to investigate and prosecute traditional crimes that are now committed through technology.
In September of 2017, the SEC announced the creation of its own Cyber Unit that is tasked with investigating the following:
1. Market Manipulation
Market manipulation schemes involving false information spread through electronic and social media.
Hacking to obtain material nonpublic information, misconduct perpetrated using the dark web, intrusions into retail brokerage accounts, and cyber threats to trading platforms or other critical market infrastructure.
3. Blockchain & ICOs
Violations involving distributed ledger technology (blockchain) and initial coin offerings (ICO).
4. Securities Fraud & Cybercrime - Case Example
In early November 2017, a day-trader was indicted in federal court in the Eastern District of New York (EDNY) for allegedly committing traditional securities fraud using the internet.
According to the FBI:
“This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” stated FBI Assistant Director-in-Charge Sweeney.
“As alleged, the scheme involved hacking into victims’ online securities brokerage accounts to make unauthorized trades that would benefit the defendant through the use of short sales. The scheme ultimately led to a loss of over $2 million to victim accounts. The FBI will continue to investigate and bring to justice those who commit securities fraud in an effort to ensure the fairness and integrity of our financial markets.”
How Tim Anderson Law can help
Tim Anderson Law has significant experience in effectively resolving our clients’ cases through creative problem-solving, thorough investigation, and adroit negotiation and litigation, all to help our clients make the crucial strategic and tactical decisions necessary to navigate complex federal criminal securities fraud cases.
In our over 25 years of practice, we have successfully represented clients accused of traditional securities fraud, such as hedge-fund managers and people accused of perpetrating “pump and dump” schemes.
As technology progressed, so did we, as we have also defended hackers accused of high-level cybercrime, such as aggravated identity theft, computer intrusion, and deploying botnets.
Leveraging Experience & Technology
Our firm has the unique combination of traditional trial experience and technological competency to successfully defend individuals in high- stakes criminal litigation and government investigations.
Our fundamental approach to every case is a relentless focus on the minute details of each case and a meticulously planned strategy to work towards achieving the best possible outcome for our clients.
We bring a trial mentality to every case and every investigation. This mindset allows us to provide our clients with a rigorous, disciplined defense strategy at every stage of their cases.
Whether it is an investigation by the SEC, FINRA, the Office of the Comptroller of Currency (OCC), the Department of Justice (DOJ), the United States Attorneys’ Offices, Homeland Security, the DEA, FBI, ATF, IRS, DOD, or ICE, we understand that our clients are facing accusations that seem vague, complicated, and at times, intimidating.
We at Tim Anderson Law will help you understand the government’s position while identifying methods to strengthen your defense.
In the end, our strategy is simple: we put our clients first and work doggedly on their behalf. Of course, no attorney can guarantee a certain result, but it has been our experience that our work ethic, skill, compassion, and diligence all contribute to maximize our clients’ chances of receiving very favorable outcomes.
The sooner we have an opportunity to discuss your rights, potential defenses and case strategies, the better the chances of a great outcome, including the possibility that you are never charged.