In recent years, the SEC has stepped up its enforcement of securities violations, issuing hefty penalties for companies and individuals that violate its rules. Some of these penalties can be quite severe, preventing violators from doing business with the government or financial institutions in the future. SEC violations can also lead to criminal charges.
Understanding what actions may lead to an SEC violation and what you should do if you face accusations is essential.
Common SEC violations
The Securities and Exchange Commission (SEC) is a government agency regulating the securities industry. One of the SEC’s main goals is to protect investors from fraud and manipulation. To that end, the SEC enforces several rules and regulations to ensure market fairness and transparency.
Some common SEC violations include insider trading, fraud, and misrepresentation. Insider trading refers to the illegal practice of buying or selling securities based on material non-public information. Fraud is any intentional deception or misrepresentation to induce another person to invest or trade. Misrepresentation occurs when a security is sold using false or misleading information.
The SEC can bring civil enforcement actions against individuals or firms who have violated securities laws. These actions can result in fines, disgorgement of ill-gotten gains, and permanent bars from serving as an officer or director of a public company.
The SEC can also refer cases to the Department of Justice for criminal prosecution. Criminal penalties for securities fraud can include up to 20 years in prison and fines of up to $5 million.
If you have been accused of an SEC violation, it is imperative to seek legal counsel immediately. These are serious charges, and you will need help navigating the complex legal process, building a solid defense and protecting your rights.