Fraud is a crime in which one person knowingly makes a false statement in order to gain something of value, and another person acts in reliance on that bad information. The harm lies in the reliance. If someone makes a false statement but no one acts on it, there’s no crime to prosecute.
Securities fraud deals specifically with business, especially shares of a company. For instance, if the director of a company falsifies financial information in order to boost the company’s stock price, and investors spend money based on that falsified information, prosecutors will argue that the director committed securities fraud.
This type of fraud doesn’t necessarily have to be committed by someone in the company. For example, an investor might commit fraud by publishing false information about a company in order to profit from driving up its stock price.
It’s important to note that securities and business transactions are highly regulated, and people can commit fraud by failing to follow rules and regulations. This is how insider trading becomes a form of securities fraud. People who have confidential information about a company are prohibited from selling or buying stock before the information is made public.
Putting securities fraud in general terms, as we have done here, makes the charges seem simple, but they are not. The results in securities fraud cases can vary widely depending on the facts of the case. Every case is different, and the evidence is often difficult to interpret for judge and jury.
To mount a strong defense, a defendant in a securities fraud case needs a criminal defense attorney who knows how to interpret the evidence and present it to the court.