Ineptitude or Negligence

An investment fraud lawyer explains when ineptitude or negligence is a crime

Within the business and financial industries, complex transactions take place every day. Those in positions of power- including stock brokers, CEOs, CFOs, and investment advisors- are expected to have an understanding of the transactions that they are participating in. When a financial professional makes mistakes, accusations of ineptitude and negligence may arise.

Negligence can sometimes result in a civil lawsuit, especially when a duty of care exists and a professional level of skill is expected. Accountants, for example, can be sued for malpractice for ineptitude or negligence. Ineptitude and negligence can even lead to criminal charges in limited circumstances, but defendants may often avoid conviction by showing that their behavior did not rise to the level of recklessness.

At Bukh Law Firm, PLLC, our experienced investment fraud lawyers have helped many clients on trial for investment fraud crimes based on ineptitude or negligence. Our attorneys know the law and the available defenses and will do everything we can to help you stay out of jail, keep your professional license, avoid SEC actions, and move on with your life.

Consequences of Ineptitude or Negligence

Most types of fraud charges and many other criminal cases require both actus reus and mens rea. Actus reus refers to a criminal act, and mens rea refers to a guilty mind. If you did not intentionally participate in a scheme or an artifice to mislead, you should not be charged with securities fraud or other fraud crimes. The prosecutor must prove beyond a reasonable doubt that you participated in an intentional deception and that either you or co-conspirators you were involved with took at least one active step towards violating the law.

This does not, however, mean that ineptitude or negligence has no consequences. In Aaron v. Securities and Exchange Commission, the Supreme Court held that negligence alone may be sufficient to satisfy the scienter requirement in Section 17 of the Securities Act of 1933. Section 17(a) is an anti-fraud provision in the Act that makes it unlawful to “employ any device, scheme, or artifice to defraud.” The same case also held that negligence could be sufficient to establish a violation of Section 10(b) and 10(b)-5 of the Securities Exchange Act of 1934. This means that if you are accused of ineptitude or negligence, the SEC could pursue a civil action and you could face significant financial consequences.

Because of the risk of major financial loss and the potential end of your career in the financial industry, you need to be proactive in responding to claims that you behaved negligently or were inept in the tasks you performed. Bukh Law Firm, PLLC investment fraud lawyers defend clients in both civil and criminal cases and can help you to defend yourself against accusations that you were careless or unprofessional.

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Is Ineptitude or Negligence Ever a Crime?

While ineptitude and negligence should not result in criminal penalties, there are times when you may find yourself facing charges. For example:

You may be charged with a fraud offense and accused of making intentionally misleading statements when you simply made a mistake. Under these circumstances, you could actually use your lack of knowledge as a defense to the criminal charges.
You may be charged with a crime if prosecutors believe you practiced willful blindness. If you participated in a pump-and-dump scheme and aggressively marketed a worthless penny stock while working in a boiler room, the prosecutor may claim you intentionally participated in the fraud even if you were unaware that you were misleading investors. You could claim ineptitude and the prosecutor may argue willful blindness, trying to show that you chose not to determine if you were participating in a scam.
You may be charged with a crime for gross negligence or extreme recklessness. A CEO who is grossly negligent in certifying financial statements- even though those statements are inaccurate- could potentially face criminal penalties under Sarbanes Oxley.

When you are accused of breaking any investment or securities fraud laws, the penalties can be substantial. You need to get legal help defending yourself from the charges.

An Investment Fraud Lawyer Can Help

Bukh Law Firm, PLLC will be there to help you at every step of your criminal and civil case when you are accused of ineptitude or negligence.

Call today to learn how a New York investment fraud lawyer can help you.