Types Of Securities Violations That Brokerage Firms May Face
If you have just started your brokerage or investment firm, then you should be on the lookout for the following violations that may trigger criminal charges:
Insider Trading
Insider trading occurs when you engage in selling or buying of securities based on information that is not available to the public. Consider an example where you are the director of a company and you know that the company's shares are about to rise because of a financial windfall from a new investor. You can be accused of deciding to buy several shares of the company before the information is made available to the public.
Market Manipulation
Market manipulation is a deliberate interference with the free and fair market conditions. You will face charges of market manipulation if you, as a broker or an investor, engage in activities that create a false impression of the availability or price of securities. A classic example of market manipulation is the practice known as churning where you place both buy and sell orders for the same securities at the same price. You won't be making money on the transactions, but other investors may make their financial decisions based on the increased market activities of the securities you are manipulating.
Unauthorized Trading
Brokers or investors typically have a leeway, with reason, to handle their client's funds without contacting the clients every single time. However, most people also provide their investment firms or brokers with broad guidelines on what they can or cannot do. Going against your client's instructions will attract unauthorized trading accusations. For example, if your client doesn't want their portfolio to include real estate investment companies, they may accuse you of unauthorized trading if you invest their money in a real estate property company.
Breach of Fiduciary Duty
You may face this accusation if you are deemed to have managed the investment sale or purchase of a company of which you have a conflict of interest. This is particularly true if the conflict of interest prevents you from remaining loyal to your client. Consider a case where your spouse is one of the major shareholders of a public company, and one of your clients has instructed you to sell the shares in the company. You can be accused of breaching your fiduciary duties if you are found to have advised the client against selling the shares not because it made good financial sense, but because you didn't want your spouse's company to experience heightened market activity at the time.
White-collar crimes are just crimes like any others; you need to take them seriously. In fact, in addition to the usual criminal penalties; a white collar crime such as securities violation can easily cripple your profession before it even takes off properly. That is why you should not hesitate to call a criminal defense lawyer the minute you realize you are facing white-collar criminal charges. Get in touch with a firm such as Johnson/Turner Legal today.
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