White Collar Crime: Securities Fraud

Due to their complexity, securities are a prime target for manipulative behavior, some of which rises to the level of fraud. Individuals who commit securities fraud often receive large sums of money, making this a very serious offense under both Florida and federal law. Any person who is involved in securities should be aware of what constitutes securities fraud, both to protect oneself from ending up a victim and to ensure compliance with the law.

What is a Security?

Generally speaking, a security is an interest or instrument related to finance. Though our focus here is on Florida, rather than federal law, under the Securities Act of 1933, a security is defined, in part, as “any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, or certificate of interest or participation in any profit-sharing agreement.” A similar definition is found under §517.021(21) of the Florida statutes.

Florida’s Securities Fraud Law

Under Florida law, in connection with providing investment advice, or in connection with the offer, sale, or purchase of any investment or security, it is illegal to:

  1. employ a device or scheme to defraud;
  2. obtain money or property by making an untrue statement of a material fact or by misleading by omitting to state a material fact; or
  3. engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a person.

“Investment” is defined, subject to certain exceptions, as any commitment of money or property primarily offered by a representation that economic benefit may be received as a result of such commitment.

Penalties

Pursuant to §517.302, securities fraud is typically considered a third degree felony, punishable by a fine of up to $5,000 and/or a prison sentence of up to five years. However, if the money or property was obtained from five or more people and exceeds $50,000, the offense may be considered a first degree felony. The punishment for a first degree felony is a fine of up to $10,000 and/or a prison sentence of up to 30 years.

Instead of the fines normally associated with a felony offense, a person convicted of securities fraud may be fined an amount up to three times the gross value gained or three times the gross loss caused. In addition, a convicted person may be fined courts costs, as well as the reasonably incurred costs of the investigation and prosecution.

The fines assessed and collected as costs of the investigation and prosecution are deposited in an Anti-Fraud Trust Fund, which is used to investigate and prosecute administrative, civil, and criminal actions related to securities fraud. The trust fund may also be used to improve public awareness and understanding of prudent investing.

White Collar Criminal Defense Attorneys

As is often the case with white collar crime, federal authorities may become involved in investigating securities fraud. If this occurs, the potential for severe penalties increases. This fact, along with the complexity of securities fraud cases, makes consulting with experienced legal counsel critically important. Contact the experienced South Florida white collar crime defense law firm at Farkas & Crowley, P.A. today and let us help you defend yourself.