Kushner | Law Group PLLC
Kushner | Law Group PLLC
Kushner | Law Group PLLC

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What are the most common SEC violations?

On Behalf of | Feb 29, 2024 | Federal Crimes |

The Securities and Exchange Commission (SEC) is one of the most influential federal agencies. The SEC helps to investigate financial crimes, especially those involving businesses and investment professionals. The SEC can present information to the Justice Department to ensure the prosecution of individuals who violate federal financial statutes.

Many different kinds of business conduct could lead to an SEC investigation, including actions that lead to major losses for investors or other businesses. The SEC can investigate different types of financial offenses. According to the organization’s own data, there are certain types of white-collar crimes that are more likely to occur than others. Statistically, the following are the top violations that the SEC investigates.

Insider trading

Business executives and others with access to non-public information should not leverage what they know about a company’s plans or financial challenges for personal gain. They also should not share that non-public information with friends or family members who engage in trading activities. Insider trading is one of the most common offenses investigated by the SEC.

Investment fraud

Frequently, the SEC starts looking into a professional or an investment firm because of fraudulent or inaccurate statements made to parties hoping to invest. Misrepresenting the nature of an investment or the returns that the investment generates is a common form of white-collar crime that could lead to an SEC investigation and possibly federal charges.

Misappropriating investment funds

Sometimes, those managing resources for others, including investment professionals and entrepreneurs, steal or misappropriate the invested funds. A Ponzi scheme is an example of this type of misconduct. Professional takes investment capital from one party to pay returns to another. They do not invest someone’s funds as they should and therefore have no way of reimbursing investors for their contributions.

Selling unregistered securities

Securities, including notes, bonds and stocks require registration with the SEC prior to sale. Some parties try to speed up returns on investments by rushing securities to the market before properly registering them with the SEC.

Anyone who is being investigated for offenses like the four listed above could be at risk of federal prosecution and significant penalties and could, therefore, benefit from seeking legal guidance. Ultimately, understanding what behavior could trigger an SEC investigation – and possible subsequent prosecution – may benefit those trying to avoid expensive and life-altering white-collar criminal accusations.