Securities fraud accusations carry devastating consequences on your business, finances, and reputation. Fortunately, the Georgia securities fraud lawyers at Griffin Durham Tanner & Clarkson don’t shy away from these tough cases. We know how to build a strong defense for those facing investigations for securities fraud in Georgia.
Led by former federal prosecutors, our team has a unique understanding of the intricate details of securities fraud law and the strategies used by prosecuting attorneys. We use this insight to develop tailored defense strategies that serve the best interests of our clients.
If you or someone you know is facing an investigation, subpoena, or criminal charge related to securities fraud in Georgia, we can help. Call our Atlanta office at (404) 891-9150 or our Savannah office at (912) 867-9140 to schedule a consultation.
What is securities fraud?
Securities fraud is a white-collar crime that involves the misrepresentation, misappropriation, or manipulation of investments for personal gain. It can involve a broad spectrum of activities such as insider trading, stock price manipulation, or the falsification of financial records.
People who work with investments and money, like investment brokers, dealers, and advisers, are most commonly accused of securities fraud, but anyone can face these charges. Even the most honest and ethical individuals may be wrongfully accused of securities fraud due to a misunderstanding or an administrative error.
Prosecutors are known to take a hard stance on these cases, and convictions can lead to serious penalties, including imprisonment and fines. Civil penalties are also possible, such as financial restitution or disgorgement, which involve surrendering profits gained from the misconduct.
How securities fraud applies to the securities industry in Georgia
The Georgia Uniform Securities Act is a comprehensive set of regulations that govern the operations of the securities industry in the state. It outlines the standards of conduct that must be followed and is designed to protect investors from fraudulent activities and to ensure the legitimacy of investments.
The securities industry is highly regulated, and there are numerous agencies that implement the terms of the Uniform Securities Act. Most notably, the Georgia Securities Division of the Office of the Secretary of State is responsible for enforcing the Act and investigating violations.
When suspected misconduct is identified, the agency can bring criminal or civil proceedings against an individual or a business. The Governor’s Office of Consumer Protection may also be involved in the investigation.
Federal securities agencies, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), can also investigate suspected securities fraud in Georgia. Some cases involve both state and federal agencies, depending on the nature of the alleged misconduct. Our Georgia white-collar crimes defense attorneys are qualified to represent clients in both state and federal proceedings.
Burden of proof
In any court case — civil or criminal — the burden of proof is on the party initiating the proceedings. However, the elements of a securities fraud claim are different depending on whether it’s brought in civil or criminal court.
Civil securities fraud cases in Georgia only require the plaintiff (the party bringing the suit; either a government agency or the alleged victim) to demonstrate that the defendant (the party against whom the claim is being made) “more likely than not” committed certain prohibited acts.
For criminal securities fraud cases in Georgia, the prosecutor must prove beyond a reasonable doubt that the defendant knowingly and intentionally committed certain prohibited acts.
Elements of a securities fraud claim
In either type of proceeding, the plaintiff or prosecutor must generally show that the defendant:
- Was involved in an offer to buy or sell securities, or in the purchase or sale of securities
- Made an untrue statement or omitted a fact necessary to make a statement not misleading
Additional elements may be required in certain cases, especially those involving civil proceedings. Although the standard of proof is heavier in criminal proceedings, it can often be more difficult for a plaintiff to win a civil case due to Georgia’s unique laws regarding civil securities fraud claims. In addition to the above-mentioned elements, the court must also find that the defendant acted with scienter, the intent to deceive with severe recklessness. This means that only the most extreme deviations from the ordinary standards of care may be punishable in civil court.
Economic loss and causation are also necessary elements in civil securities fraud cases. The plaintiff must show that they suffered an economic loss as a result of the defendant’s actions and that the defendant’s misstatements or omissions were the cause of the loss.
For example, if the case involves the sale of a stock based on the advice of a stockbroker and the stock’s price rises soon after, the plaintiff must show that the stockbroker knew that the price was likely to rise and that the plaintiff relied on the stockbroker’s advice in making the sale.
Types of securities fraud
The term “securities fraud” can encompass many different kinds of activities. While the core elements of fraud remain the same, the specific acts that constitute securities fraud can vary widely. We’ve represented clients facing a range of securities fraud accusations, giving us a unique insight into the nuances of these cases.
Insider trading
When an individual or group with access to confidential information uses that information to make personal financial gains, they may be guilty of insider trading. This type of behavior gives the trader an unfair advantage in the marketplace and can damage the public’s trust in the stock market, so prosecutors take it very seriously.
Pump-and-dump schemes
This type of scheme involves groups of people artificially inflating the price of a security, or “pumping” it by making false and misleading statements to the public. Once the price has been pumped up, the fraudsters then sell, or “dump,” their shares for a profit. This causes the price to crash, and investors may suffer significant losses.
Churning
In this type of fraud, a stockbroker performs excessive trading in order to generate more commissions for themselves. It involves buying and selling securities without considering the investor’s best interests and can end up costing investors a substantial amount of money.
Ponzi & pyramid schemes
These are two similar types of fraudulent investment operations where the perpetrator pays returns to its investors from new money paid by other investors, instead of from any actual profits generated. Such schemes often promise high returns to investors but eventually end up collapsing as the perpetrator is unable to generate enough new funds to pay off existing investors.
Defenses to a securities fraud claim
You have the right to defend yourself by presenting evidence, calling witnesses, and arguing your case in trial. The exact nature of your defense will depend on the specific facts of your case, but the following are just a few possible defense strategies that may be available to you.
These defenses are more likely in civil cases. In criminal cases, the goal of a defense is typically to question the evidence presented by the prosecution and establish reasonable doubt. Your attorney can help you assess the evidence and work with you to build a defense strategy that’s tailored to your case.
Lack of intent or reliance
You may be able to argue that you didn’t act with the intent to deceive or defraud and that the plaintiff never relied on your statements or omissions. This defense will be stronger if you can provide evidence that the plaintiff was aware of the facts and knowingly invested anyway.
Statute of limitations
Securities fraud claims are subject to a statute of limitations, which is the legal timeframe in which a lawsuit must be filed. If the claim is brought after the statute of limitations has expired, it can be dismissed. Multiple statutes of limitations apply to securities fraud claims, so it’s best to consult an experienced Georgia white-collar crimes defense attorney to determine if this is a viable defense.
Plaintiff’s own negligence
If the plaintiff’s losses resulted from their negligence rather than yours, they may not be able to recover damages. You can establish the plaintiff’s own negligence by showing that they had access to the same facts as you and should have reasonably known to not invest.
Monetary damages
When a person or organization is found liable for securities fraud, the plaintiff may be entitled to monetary damages. This can include reimbursement of their losses and even punitive damages if the fraud was especially egregious. It’s important to note that in some cases, the court can order a defendant to disgorge ill-gotten gains in addition to other damages.
As a defendant, you may be able to negotiate a settlement with the plaintiff. This can provide more certainty and remove the risk that comes from a trial, but not all cases will settle, nor are all settlements the right choice. Our Georgia white-collar crimes defense attorneys can help you evaluate your options and decide which approach is best for your situation.
Criminal penalties
In addition to civil damages, securities fraud can carry serious criminal penalties. Securities fraud is a Class C felony under federal law, and a conviction can result in prison time and hefty fines.
The prison sentence and fine amount vary from case to case, but federal law can provide for up to 20 years in prison and a $5 million fine. Most convictions result in less than the maximum penalty, but if the fraud was particularly egregious and caused substantial losses, you can expect to receive a sentence at or near the maximum. Probation is also possible in cases involving minimal financial loss, but it’s uncommon in federal cases.
Let a Georgia securities fraud lawyer help you
Hope is not lost if you’re facing an accusation or investigation for securities fraud. The right defense strategy can help you protect your freedoms and financial interests, and an experienced trial attorney can be your best ally.
With extensive experience in Georgia white-collar crime defense and high-stakes business litigation, the attorneys at Griffin Durham Tanner & Clarkson have the skills and resources to develop a comprehensive defense strategy on your behalf.
We’re trial attorneys first and foremost, and our versatile team has tried and won some of the most highly-publicized white-collar cases. We’ve even convinced investigators to close investigations without the public’s knowledge of their occurrence.
Let us put this background to work on your behalf. Contact us today to learn more about how we can help you fight back against securities fraud accusations. You can reach our Atlanta office at (404) 891-9150 or our Savannah location at (912) 867-9140.