Securities Fraud Attorney

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

This page is written for people and firms under investigation. If you are an investor trying to recover losses, this is not the page you need — much of what ranks for these terms is written by investor-recovery firms, and their interests are the opposite of a defendant’s. Everything below is defense-side.

Criminal securities fraud is prosecuted under two different regimes at once, and the single most important fact about it is that an SEC civil investigation and a Department of Justice criminal case usually run in parallel, on the same facts, at the same time. The SEC has a lower burden of proof and broader discovery. The DOJ has the power to imprison. Evidence a person gives to one is available to the other. The decision about whether, when and how to engage with the SEC — particularly whether to testify — is therefore the most consequential early call in the case, and it has to be made before the criminal picture is clear.

The parallel-proceedings map

	SEC — civil enforcement	DOJ — criminal prosecution
Burden of proof	Preponderance of the evidence	Beyond a reasonable doubt
Mental state	Scienter — “intent to deceive, manipulate, or defraud” (Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976))	Scienter plus willfulness — 15 U.S.C. § 78ff(a) requires a willful violation
Compelled testimony	Yes — by subpoena, in investigative testimony	No — grand jury cannot compel a target’s testimony over a valid Fifth Amendment claim
Adverse inference from silence	Permitted in the civil case	Prohibited in the criminal case
Remedies	Injunctions, disgorgement, civil penalties, officer-and-director bars, industry bars, penny-stock bars	Imprisonment, criminal fine, forfeiture, restitution, supervised release
Maximum penalty	Monetary and remedial only	20 years and a $5,000,000 fine for an individual; $25,000,000 for an entity (§ 78ff(a))
Timing	Often first, and usually faster	Often later, and often decided on the SEC’s record

Table: how the two proceedings differ. The asymmetries in rows three and four are the whole problem: the SEC can compel testimony and draw an inference from silence; the criminal case can use whatever is said and cannot penalize silence.

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The three statutes that matter

§ 10(b) and Rule 10b-5

Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), makes it unlawful “[t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered … any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe.”

Section 10(b) is not self-executing. It operates through Rule 10b-5, 17 C.F.R. § 240.10b-5, which has three subsections:

“It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

The three subsections are not interchangeable. Subsection (b) is the misstatement provision. Subsections (a) and (c) are “scheme liability” provisions reaching conduct rather than statements, and they are what the government uses when the defendant did not personally make the statement at issue.

The criminal element that civil cases do not have. A civil 10b-5 case requires scienter. A criminal prosecution under § 78ff(a) requires that the defendant “willfully violate[]” the provision or rule — and the statute contains a defense that is genuinely unusual in federal criminal law: “no person shall be subject to imprisonment under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or regulation.” The Supreme Court described that provision, together with the willfulness requirement, as one of “two sturdy safeguards Congress has provided regarding scienter” — United States v. O’Hagan, 521 U.S. 642, 665–66 (1997).

That defense goes to imprisonment only, not to fines, and it places the burden on the defendant. It is nonetheless a real and underused provision.

§ 1348 — the Sarbanes-Oxley securities fraud statute

18 U.S.C. § 1348, added by the Sarbanes-Oxley Act of 2002, is the provision most defense pages omit, and it is often the government’s preferred charge. It reaches whoever “knowingly executes, or attempts to execute, a scheme or artifice —

(1) to defraud any person in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 … or that is required to file reports under section 15(d) …; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any commodity for future delivery, or any option on a commodity for future delivery, or any security of [such an issuer].”

The maximum is 25 years — five more than § 78ff.

Why prosecutors like it:

• It is drafted like the mail and wire fraud statutes, not like the securities laws. It requires a scheme to defraud, knowingly executed. It does not require proof of a violation of a Commission rule, and so it does not carry § 78ff’s no-knowledge defense.
• It avoids the technical apparatus of 10b-5 litigation — reliance, loss causation, the “in connection with” case law built up in private civil actions.
• Its coverage is defined by the issuer, not by the transaction. The security must be one of an issuer registered under § 12 or reporting under § 15(d), which limits it to public-company securities but otherwise leaves the government considerable room.

The practical consequence for a defendant is that a securities case may be charged under § 1348, § 78ff, wire fraud, or all three, and the elements are not the same. Identifying which statute carries which count is the first step in the case.

The penalty provision: § 78ff

Offense	Maximum imprisonment	Maximum fine
Willful violation of the Exchange Act or a rule (§ 78ff(a)) — natural person	20 years	$5,000,000
Same — entity	—	$25,000,000
Securities and commodities fraud (§ 1348)	25 years	Title 18 fine
Wire fraud (§ 1343), commonly charged in parallel	20 years; 30 if a financial institution is affected	Title 18 fine; $1,000,000 in the enhanced tier

Table: maximum penalties. The no-knowledge defense in § 78ff(a) applies to imprisonment for a rule violation, not to fines, and not to § 1348.

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What the government has to prove

The elements differ by statute, and the differences are the case.

Criminal Rule 10b-5, charged through § 78ff

1. A misrepresentation, omission of a material fact where there was a duty to disclose, or a scheme or artifice to defraud — Rule 10b-5(a), (b) or (c);
2. Materiality — a substantial likelihood that a reasonable investor would have viewed the fact as significantly altering the total mix of information (Basic);
3. Scienter — “intent to deceive, manipulate, or defraud” (Hochfelder);
4. “In connection with” the purchase or sale of a security;
5. Use of interstate commerce, the mails, or a national exchange facility; and
6. Willfulness — required for the criminal offense by § 78ff(a), and not required in a civil case.

Note what is not on that list in a criminal case: reliance, loss causation and damages. Those are elements of a private civil action. The government need not prove that any investor relied, or that the fraud caused a measurable loss. Loss returns at sentencing, where it does most of the work — but it is not an element of the offense.

§ 1348

1. A scheme or artifice either (a) to defraud any person in connection with a covered security or commodity, or (b) to obtain money or property by materially false pretenses in connection with the purchase or sale of one;
2. Knowing execution or attempted execution of that scheme; and
3. The security is one of an issuer registered under § 12 or reporting under § 15(d) of the Exchange Act — or the matter involves a commodity for future delivery or an option on one.

Section 1348 does not require proof of a Commission rule violation, and so § 78ff’s no-knowledge defense does not attach to it. Nor does it require the “manipulative or deceptive device” language that generated the Hochfelder scienter analysis. It is, in structure, a fraud statute rather than a securities statute — which is precisely why it is charged.

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Scienter: the battleground

Every securities fraud theory turns on state of mind, and the governing definition comes from Ernst & Ernst v. Hochfelder, which held that a private action under § 10(b) and Rule 10b-5 will not lie “in the absence of any allegation of ‘scienter’ — intent to deceive, manipulate, or defraud.”

The Court grounded that in the statutory text. The words “manipulative,” “device,” and “contrivance,” it said, “make unmistakable a congressional intent to proscribe a type of conduct quite different from negligence.” And “manipulative” is “virtually a term of art when used in connection with securities markets,” connoting “intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities.”

What Hochfelder expressly did not decide. The Court reserved the recklessness question: “We need not address here the question whether, in some circumstances, reckless behavior is sufficient for civil liability under § 10(b) and Rule 10b-5.” The Supreme Court has never resolved it. Courts of appeals have developed their own formulations, generally requiring something well beyond ordinary negligence — an extreme departure from the standards of ordinary care presenting a danger of misleading that was either known or so obvious the actor must have been aware of it. Because that standard varies in its articulation, the law of the charging circuit is what governs, and it should be checked rather than assumed.

For a criminal case, the point is sharper still: § 78ff requires willfulness on top of scienter. A recklessness theory that might support civil liability is a much harder fit with a criminal willfulness instruction, and the difference between the civil and criminal standards is one of the most productive lines of argument available where the SEC has already made findings.

Where scienter is actually contested. Reliance on counsel and on auditors; disclosure that was made but is said to have been inadequate; forward-looking statements and projections that did not come true; complex accounting judgments where reasonable professionals differed; and the difference between a decision that turned out badly and a decision made to deceive.

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Materiality: the element the government has to prove and rarely litigates

A misstatement or omission is only actionable if it was material, and the standard is more demanding than “someone might have wanted to know.”

The Supreme Court adopted the TSC Industries formulation for the Rule 10b-5 context in Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988): “[a]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote,” and “there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”

Basic is explicit about why the bar is not lower. The Court was “careful not to set too low a standard of materiality,” concerned that a minimal standard “might bring an overabundance of information within its reach, and lead management ‘simply to bury the shareholders in an avalanche of trivial information — a result that is hardly conducive to informed decisionmaking.'”

Contingent events: probability times magnitude

For events that had not yet happened — merger discussions, a possible regulatory outcome, an anticipated contract — Basic rejects any bright-line rule and adopts a balancing test. Materiality “will depend at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.”

The Court gave the factors. To assess probability, a factfinder looks “to indicia of interest in the transaction at the highest corporate levels” — “board resolutions, instructions to investment bankers, and actual negotiations between principals or their intermediaries.” To assess magnitude, the factfinder considers “the size of the two corporate entities and of the potential premiums over market value.”

That framework matters to a defendant more than it might appear. In cases built on what a company did not say about an inchoate development, the government has to establish both halves. Early-stage discussions that never reached the board, that generated no instructions to bankers, and that involved a transaction small relative to the company, are a materially weaker case than the indictment’s narrative usually suggests — and “materiality is something to be determined on the basis of the particular facts of each case.”

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What counts as a “security”

There is no securities fraud without a security, and the definition is functional rather than formal.

The test comes from SEC v. W.J. Howey Co., 328 U.S. 293 (1946): “an investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.”

Stated as elements, an investment contract requires:

1. an investment of money;
2. in a common enterprise;
3. with an expectation of profits;
4. derived from the efforts of others.

Howey was decided about citrus groves, and the Court was explicit that the definition “embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.” That flexibility is why the test now does work its authors never contemplated — over interests in real estate, in equipment leasing programs, in franchise arrangements, in fund structures, and in digital assets.

Digital assets. Whether a particular token or arrangement is an investment contract is contested, actively litigated, and not resolved by any Supreme Court decision. The Howey elements are the framework every court applies, and the fourth element — whether purchasers expected profits from the essential managerial efforts of others — is where the analysis usually turns. Two things can be said without overstating: the question is decided arrangement by arrangement rather than asset class by asset class, and the answer determines whether the securities laws apply at all. Anyone facing a digital-asset securities charge needs advice on the current state of that law in the charging circuit, not a general proposition.

Why this matters to a defendant. If the instrument is not a security, § 10(b), Rule 10b-5 and § 1348 do not apply. That is a threshold defense, and it is worth testing before conceding. The government will usually have a wire fraud count ready as a fallback, which is a different offense with different elements — the subject of our white collar crime lawyer hub and the wire fraud page it links to.

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Parallel proceedings: the defining problem

This is the part of a securities case that determines its shape, and it is the part almost nothing on the public internet explains from the defense side.

How it actually unfolds

1. The SEC opens a matter under inquiry (MUI), typically informally. There is no notice to the subject.
2. A formal order of investigation issues, giving the staff subpoena power over documents and testimony.
3. Document subpoenas go out — to the company, to brokers, to banks, to phone carriers, to the individual.
4. Investigative testimony is taken, under oath, transcribed, with counsel permitted but with a limited role.
5. A Wells notice may issue, indicating the staff intends to recommend enforcement and inviting a written submission.
6. Somewhere in that sequence, the SEC may refer the matter to the Department of Justice, or the two may have been coordinating from the start.

The sequence, and the decision points inside it, are covered in detail on our sec defense lawyer page.

The Fifth Amendment problem

The SEC can compel testimony by subpoena. A witness can assert the Fifth Amendment privilege against self-incrimination and decline to answer. But the consequences of that choice fall unevenly.

• In the civil case, silence costs you. An adverse inference may be drawn from a party’s invocation of the privilege in a civil proceeding. Refusing to testify may therefore contribute to losing the SEC case — a case that can end a career through an industry bar or an officer-and-director bar.
• In the criminal case, testimony costs you. Anything said in SEC testimony is available to prosecutors. It is sworn, transcribed, and it locks in a version of events before the defense knows what the government has.
• There is no good default. Which way to go depends on what the documents show, whether a criminal referral has occurred, what the client’s exposure actually is, and whether the SEC will accept a proffer or a limited submission instead. This is a judgment call that must be made on the specific file.

What the law permits, and where the limits are

The government may run both proceedings. United States v. Kordel, 397 U.S. 1, 11 (1970), holds that it “would stultify enforcement of federal law to require a governmental agency … invariably to choose either to forgo recommendation of a criminal prosecution once it seeks civil relief, or to defer civil proceedings pending the ultimate outcome of a criminal trial.”

Kordel also identified the limits, and they are the ones defense counsel litigates. The Court expressly reserved cases where the government “has brought a civil action solely to obtain evidence for its criminal prosecution,” where it “failed to advise the defendant in its civil proceeding that it contemplates his criminal prosecution,” where the defendant is unrepresented, or where there are “other special circumstances that might suggest the unconstitutionality or even the impropriety of this criminal prosecution.”

Those reservations are why the record of who knew what, and when, matters. If the criminal investigation was already open while the SEC was taking testimony, and the subject was not told, that is a fact worth developing.

One document does part of the disclosure work. The SEC provides witnesses with a form setting out the routine uses of information supplied to the Commission — including that it may be provided to the Department of Justice for possible criminal prosecution. It is agency practice rather than law, but it is the document a court will look at when assessing what a witness was told, and it is worth reading before, not after, testifying.

What the SEC can reach, and how far back

Two limits on the Commission’s remedies are recent, statutory, and worth knowing before any settlement discussion.

Disgorgement is capped at net profits, and it is for victims. Liu v. SEC, 591 U.S. 71 (2020), holds that “a disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible under § 78u(d)(5).” Three consequences follow from the opinion’s reasoning:

• Legitimate expenses must be deducted. “[C]ourts must deduct legitimate expenses before ordering disgorgement,” because a rule that “make[s] no allowance for the cost and expense of conducting [a] business” would be “inconsistent with the ordinary principles and practice of courts of chancery.” The exception is where the entire business was the fraud.
• The award should go to investors. “The equitable nature of the profits remedy generally requires the SEC to return a defendant’s gains to wronged investors for their benefit.” The Court left open what happens where distribution is genuinely infeasible.
• Joint-and-several liability is the exception, not the rule. Equity courts “generally awarded profits-based remedies against individuals or partners engaged in concerted wrongdoing, not against multiple wrongdoers under a joint-and-several liability theory.” In a multi-defendant case that distinction is worth a great deal of money.

The limitations periods are now express. Congress supplied them in 2021, and 15 U.S.C. § 78u(d)(8) sets them out:

Claim	Period
Disgorgement — non-scienter violations	5 years from the latest date of the violation
Disgorgement — violations of § 10(b), Securities Act § 17(a)(1), Advisers Act § 206(1), “or any other provision of the securities laws for which scienter must be established”	10 years
“[A]ny equitable remedy, including for an injunction or for a bar, suspension, or cease and desist order”	10 years
Tolling	Time the person is “outside of the United States” does not count

Table: SEC limitations periods under 15 U.S.C. § 78u(d)(8), added by Pub. L. 116-283 § 6501 and applicable “with respect to any action or proceeding that is pending on, or commenced on or after,” 1 January 2021.

Note what that table means in a parallel-proceeding case: the SEC’s reach for scienter-based disgorgement and for bars runs ten years, twice the ordinary five-year criminal period under 18 U.S.C. § 3282(a). Conduct that can no longer be prosecuted can still be the subject of an enforcement action and an industry bar.

The remedies that survive an acquittal

A criminal acquittal does not dispose of the SEC case. Different burden, different forum, different remedies. A defendant can be acquitted of criminal securities fraud and still face:

• a permanent injunction against future violations, breach of which is contempt;
• disgorgement of gains;
• civil penalties;
• an officer-and-director bar, barring service in a public company;
• an industry bar or a penny-stock bar administered through the Commission’s administrative process.

For many clients the industry bar is the more serious outcome, because it ends a career regardless of what happens in the criminal case. Any resolution of the criminal matter that does not address the collateral SEC and self-regulatory consequences is only half a resolution.

Applied Insight — Elizabeth Franklin-Best, Esq., Principal Attorney: The question that decides the shape of a parallel-proceeding case is not “what do we say” but “what is already fixed.” Trading records, emails, chat logs, and the firm’s own compliance file exist before anyone is interviewed. The work is to know what that record says before making any decision about testimony — because once testimony is given, everything else is read against it.

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Sentencing in securities cases

Securities fraud is referenced to U.S.S.G. § 2B1.1, the same guideline as ordinary fraud, and the offense level is driven by loss. That produces a specific and well-known problem.

In a securities case, “loss” is frequently computed by reference to the aggregate decline in market capitalisation attributable to the alleged fraud, spread across a large and diffuse group of shareholders. The resulting figure can be enormous — into the levels that add 20, 24 or 30 offense levels under the loss table — even where the defendant gained nothing personally and no individual investor lost much.

The Sentencing Commission used to acknowledge this problem in the guideline’s own commentary. Application Note 21(C) to § 2B1.1 formerly identified as a downward-departure ground the case in which “a securities fraud involving a fraudulent statement made publicly to the market may produce an aggregate loss amount that is substantial but diffuse, with relatively small loss amounts suffered by a relatively large number of victims,” so that “the loss table in subsection (b)(1) and the victims table in subsection (b)(2) may combine to produce an offense level that substantially overstates the seriousness of the offense.”

Amendment 836 struck that note in its entirety, effective 1 November 2025. So did it strike the rest of Note 21, and Chapter Five, Part H is now listed in the Manual as “[Deleted].”

That does not eliminate the argument. It relocates it. The Commission framed Amendment 836 as outcome-neutral, and the facts that supported a departure remain available to support a variance under 18 U.S.C. § 3553(a). But a sentencing memorandum that asks for a “§ 2B1.1 comment. (n.21)(C) departure” is now asking for something that does not exist. The same argument, made under § 3553(a) with the diffuse-loss reasoning set out on its own terms, is unaffected. Our federal sentencing pages address how that is built.

Other § 2B1.1 provisions that recur in securities cases:

• § 2B1.1(b)(2) — victims, and substantial financial hardship: +2, +4 or +6 levels depending on the number affected. In a public-market case the victim count can be very large.
• § 2B1.1(b)(17)(B) — +4 levels if the offense “substantially jeopardized the safety and soundness of a financial institution” or “substantially endangered the solvency or financial security of an organization that, at any time during the offense … was a publicly traded company; or … had 1,000 or more employees.”
• § 2B1.1(b)(10) — sophisticated means, +2 with a floor of level 12.
• Gain as a proxy. Where “there is a loss but it reasonably cannot be determined,” the guideline permits the court to use the defendant’s gain as an alternative measure. In insider trading cases gain is usually the operative figure; in issuer-disclosure cases the loss computation is the fight.

We do not predict sentences and we do not publish ranges for a reader’s case. The loss finding, the enhancements and the § 3553(a) analysis are individual, and any figure offered without them is a guess.

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The families of conduct that get charged

“Securities fraud” is a category rather than a fact pattern. Five kinds of case account for most prosecutions, and they are defended differently.

Issuer disclosure and accounting cases. A public company’s filings, earnings releases or investor communications are alleged to have been materially false. The defendants are officers, sometimes directors, sometimes finance staff. The contest is over materiality under Basic, over scienter where accounting judgments were genuinely debatable, and over the auditor’s and disclosure committee’s role. The loss computation in these cases is a market-decline analysis and is the single largest driver of the sentence.

Insider trading. Trading on material nonpublic information, in breach of a duty. The doctrine is a duty analysis rather than an information-advantage analysis, and it is set out on our insider trading lawyer page.

Offering and investment-scheme cases. Money raised from investors on representations that were false, or used other than as represented. These are frequently charged as wire fraud alongside or instead of securities fraud, and where later investors’ money paid earlier investors they become Ponzi cases — see investment fraud attorney.

Market manipulation. Conduct aimed at the price rather than at a statement: pump-and-dump promotions, matched orders and wash trading, marking the close, and order-entry practices intended to create a false appearance of supply or demand. These are charged under Rule 10b-5(a) and (c) as scheme liability, under § 1348, and — where futures or commodities are involved — under the Commodity Exchange Act. Hochfelder’s observation that “manipulative” is “virtually a term of art” connoting “intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities” is the definitional starting point, and intent is almost always the contested element, because the same order patterns can reflect legitimate trading strategy.

Broker and adviser cases. Unsuitable recommendations, churning, unauthorized trading, misappropriation of client funds, and undisclosed compensation. These generate parallel FINRA proceedings alongside the SEC and DOJ tracks, adding a third forum with its own rules and its own bar.

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How a securities case is investigated

The evidence in a securities prosecution is almost entirely documentary and it exists before anyone is interviewed. Knowing what is already fixed is the first task in the case.

Trading records. Every trade is timestamped and attributed. Blue-sheet data from the exchanges and clearing firms gives the government a complete picture of who traded what and when, and it is usually the starting point in an insider trading or manipulation matter.

Communications. Email, chat, text and recorded lines at regulated firms. Broker-dealers and investment advisers have books-and-records obligations that mean years of communications are retained and producible on a subpoena, without the individual ever being asked.

Corporate records. Board minutes, audit-committee materials, disclosure-committee files, drafts of filings with tracked changes, and internal financial reporting. In an issuer case the drafting history of a disclosure is often the most important evidence on both sides.

The internal investigation. Where the company retains outside counsel, employees are interviewed by lawyers who do not represent them. Those interview memoranda belong to the company, are not privileged as to the employee, and are frequently produced to the government. An employee who gives a full account in an internal interview has, in practical terms, given a statement to the prosecutors — and this is the moment at which independent counsel is worth the most.

Cooperators. In multi-defendant cases someone usually pleads early. The cooperation agreement, the charges avoided, and the substantial-assistance motion the witness is hoping for are all proper subjects of cross-examination.

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Where a securities case is actually defended

Was it a security? The threshold question under Howey, and a genuine one in digital-asset and private-placement matters.

Was the statement material? Materiality is an element. Puffery, opinion, and forward-looking statements accompanied by meaningful cautionary language are treated differently from statements of present fact.

Was there scienter — and willfulness? The civil standard and the criminal standard are not the same, and § 78ff’s no-knowledge provision applies to imprisonment for a rule violation.

Who made the statement? Scheme liability under Rule 10b-5(a) and (c) is the government’s route to defendants who did not make the statement themselves, and the boundaries of that theory are contested.

Reliance on professionals. Auditor sign-off, outside counsel’s advice, and disclosure-committee process are the strongest scienter evidence available in a corporate case, and the decision to assert advice of counsel — which waives privilege over the subject matter — has to be taken early and deliberately.

The loss computation. In securities cases this is where the sentence is decided, and event-study methodology, confounding disclosures and causation are all contestable.

The parallel track. Sequencing, staying the civil case, protecting the Fifth Amendment position, and resolving the collateral bars.

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When the client is a company

Entity exposure runs on a separate track from individual exposure, and the two frequently conflict.

A corporation can be criminally liable for the acts of its employees committed within the scope of employment and at least in part to benefit the company. That exposure is real, but resolution of corporate matters is rarely a trial: it is a negotiation over charging, over monitorships and compliance undertakings, over the size of a penalty, and over whether the company receives credit for voluntary disclosure and cooperation.

The structural problem for individuals is that cooperation credit is generally conditioned on the company identifying the individuals involved and producing the relevant facts about them. A company acting rationally in its own interest will disclose. That is not a criticism of the company — it is the incentive the system creates — but it means that the interests of the entity and of its officers and employees diverge early, often before anyone realizes it has happened.

Three practical consequences follow. Individuals should have their own counsel from the point an internal investigation begins, not after. Joint defense arrangements need to be documented and their limits understood, because they can be terminated. And any individual invited to an internal interview should understand, before it starts, that the interviewing lawyers act for the company and that what is said may be produced to the government.

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Related securities pages

• insider trading lawyer — the classical and misappropriation theories, the Dirks personal-benefit test, what Salman did to Newman, and the 2022 amendments to Rule 10b5-1.
• sec defense lawyer — the MUI-to-Wells sequence, subpoenas, investigative testimony, Wells submissions, and the decision points inside an SEC investigation.
• investment fraud attorney — Ponzi and investment-scheme prosecutions, defended from the accused’s side.

Every page above is written for the person under investigation or charged. Securities-fraud searches return a great many pages written for investors seeking to recover losses; those are the other side of the same case. This securities fraud attorney overview is the starting point for the defense-side treatment of this area.

Securities cases very often carry counts covered elsewhere on this site. Almost every indictment includes wire fraud counts, because § 1343 has no scienter definition to litigate and each communication is a separate count; proceeds moved between accounts add money laundering counts under §§ 1956 and 1957; trading profits not reported add tax counts; funds taken from the issuer itself add embezzlement counts; and a financing obtained on false figures adds bank fraud counts. The grouping rules that govern how those counts combine are set out under white collar crime lawyer. Where the issuer is a health care company, the exposure described under healthcare fraud attorney can run alongside, including Medicare and False Claims Act counts drawn from the same revenue the disclosures described. Where a conviction has already been entered, direct review runs through federal appeals and claims outside the trial record through a § 2255 motion. Elizabeth Franklin-Best, P.C. is a federal criminal defense attorney practice representing individuals and firms in federal securities matters nationwide.

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Frequently Asked Questions About Securities Fraud Charges

Under SEC or DOJ Scrutiny?

Parallel civil and criminal tracks move at different speeds, and a statement made in one can surface in the other. Coordinating that from the start matters more than almost anything later.

Request a Consultation (843) 620-1100

Representation begins with a paid, one-hour consultation — a working session in which we review where matters stand and tell you honestly what options remain. We do not promise outcomes.

Reviewed for legal accuracy by Elizabeth Franklin-Best, Esq., Principal Attorney·September 2026