The Securities and Exchange Commission (SEC) is an agency of the U.S. federal government that regulates the securities industry, including security exchanges such as the New York Stock Exchange, to protect investors from fraud and abuse. The SEC was created to make sure that companies don’t deceive investors about investment opportunities, or use those investments for illegal activities like money laundering. There are also attorneys that you can reach out to for security assistance and make sure to get the best SEC defense attorney.
Types of Things That SEC Prosecute
Below are the top legal violations that the SEC investigates and prosecutes:
1. Security Fraud
This is the toughest type of SEC charges to prove, as it often involves complex financial issues. Anyone can be charged with securities fraud if they are found guilty. The SEC is known to be particularly aggressive when investigating this type of crime.
2. Insider Trading
The SEC prosecutes individuals who trade on information that they obtained from their “inside” knowledge, such as bribery or insider trading. It is defined by the law as illegal trading made by someone with a relationship of trust that has information that could help them make money. The amount gained from this illegal information is usually a misdemeanor but can lead to jail time for those convicted.
3. Securities Law Violations
Most SEC violations stem from the securities laws, which require companies to release accurate financial statements, and to disclose important information about their business. Companies who fail to comply with these measures can be charged with securities law violations.
4. Accounting Fraud
Companies often commit fraud by overstating their profits or hiding them altogether. This makes it hard for investors to know whether or not they are making good investments. The SEC focuses on prosecuting these individuals when their actions can affect the economy, such as a bank failure or company bankruptcy.
5. Fraudulent SEC Filings with False Information
This is one of the more common forms of SEC charges, especially for executives who are trying to make money off insider information that they obtained through illegal means. This includes using false documents or lying about their true identities in order to make money off of SEC-approved stock trading plans, or attempts to access other funds without the necessary authorizations such as a “piggyback” scheme.
6. Foreign Corrupt Practices Act (FCPA) Violations
The FCPA is concerned with making sure that American companies do not give bribes to other countries in exchange for contracts. This is a high-level crime, as even small bribes and kickbacks can have large effects on the economy as a whole.
7. Failure to Register
Minor violations of SEC rules do not usually lead to criminal charges. However, failing to register can certainly result in lawsuits or fines at the state level.
8. False Statements and Fraudulent Financial Information
Even though most securities laws are concerned with sharing accurate financial information, there are often people who try to get away with telling the public false information about their company or investments. This can lead to financial losses for investors in both investments as well as companies.
Laws and regulations are created to protect people and preserve the economy. The SEC and other government agencies are important tools for enforcing those laws, and for protecting the American economy from corruption.