In any market, exchanges are fair only if everyone involved has equal access to accurate information that fairly represents the state of affairs. When someone engineers a transaction to ensure that this doesn’t happen, that person has committed fraud.
Securities fraud is one way this sort of unfair transaction can occur. Security fraud is a “white collar” crime in which a company or person—such as a stockbroker, an investment or corporate bank, or a brokerage firm—misrepresents the items of information that investors will use to make decisions. Another way in which this sort of fraud can occur is when individuals engage in “insider trading”, benefitting from knowledge that should be public but isn’t. In other words, fraud can occur through a variety of means—intentionally giving bad advice, manipulating information, misrepresenting accounts, or omitting key facts—but in every case, the individual has attempted to profit from unfair use of information.
A securities fraud charge is almost always considered as a serious felony. The penalty can vary widely depending on the quality of the legal strategy formulated to address the prosecution. Because each case of fraud is so highly specific to its particular circumstances, and because the Minnesota system does not have mandatory sentencing for fraud charges, it’s nearly impossible to predict what the potential penalties will be. In many cases, it’s possible to negotiate a settlement. The size of that settlement will, of course, depend on the severity of the fraud that occurred.
Securities fraud cases are typically prosecuted at both federal and state levels. Criminal investigations can lead to felony convictions carrying penalties of up to 20 years’ imprisonment. The Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD) may seek to impose civil fines against corporations or individuals convicted of securities fraud.
