Stock Broker Fraud Crimes & Penalties Explained by a NY Securities Fraud Lawyer
Stock brokers are strictly regulated and must pass a Series 7 exam to offer a full line of securities for sale. When brokers wish to sell commodity futures, separate registration is required and the broker must be registered with the National Futures Association. Brokers are subject to myriad rules and regulations and have a fiduciary duty to clients.
Violation of any laws regulating broker licensing, commodities sales, or securities sales could not only result in a civil lawsuit and loss of a broker’s license, but could also lead to criminal charges. If you have been accused of stock broker fraud, it is imperative you have an attorney with an understanding of state and federal regulations applicable to brokers and securities sales. Bukh Law Firm, PLLC can provide the legal representation and advice you need to try to help you avoid jail time and limit financial loss.
Types of Stock Broker Fraud
Stock broker fraud can take many forms including:
- Embezzling client funds
- Misrepresentations of material facts to potential investors, such as promising high rate of returns
- Failure to disclose material facts to investors, including failure to provide required disclosures of risks or potential conflicts of interest
- Churning, or excessive trading in an investor’s account in order to generate larger commissions
- Unauthorized transactions, or making investments with client funds without permission or authorization.
- Pump and dump scams, or investing in and then heavily marketing worthless stocks to drive up their price.
- Insider trading, which involves purchasing (or causing investors to purchase) stocks based on insider information.
Brokers can inadvertently become involved in stock broker fraud by becoming a part of a boiler room operation. Boiler room brokers use cold calling techniques to contact potential investors and pressure them to buy microchip stocks using false or misleading information. Participation in unintentional fraud while working in a boiler room can have legal consequences. Under the Martin Act, which is the primary New York law targeting broker misconduct, it may be possible for a broker to face civil and even criminal prosecution for committing a defrauding act, even without a specific intent to defraud.
Brokers suspected of fraudulent behavior need to understand their rights and explore all options for fighting charges or minimizing consequences. You need an attorney who knows how to fight both civil actions and criminal prosecution. Bukh Law Firm, PLLC has successfully represented many brokers under investigation by the New York Attorney General or by federal authorities.
NY Criminal Penalties for Stock Broker Fraud
Stock brokers and brokerage firms accused of fraudulent behavior or crimes related to broker fraud may face charges on the federal or state level. Within New York, the Investor Protection Bureau has broad power to enforce laws under the Martin Act.
Under this Act, the Attorney General of New York is empowered to conduct investigations of any suspected fraud related to the offer, purchase, or sale of securities. The Act requires brokers, investment advisors and anyone selling securities to register with the Attorney General. Section 358 of the Martin Act also establishes felony or misdemeanor penalties for defrauding acts.
Brokers can also be charged with violating other New York Laws in addition to the Martin Act including:
- NY Penal Law Article 190.65, which criminalizes schemes to defraud.
- NY Penal Law Article 175, which addresses the criminal falsification of business records
- NY Penal Law Article 155, which imposes criminal penalties for grand larceny.
Bukh Law Firm, PLLC has represented brokers and brokerage firms facing criminal charges related to all types of stockbroker fraud. We know how to help you fight charges brought by prosecutors for complex financial crimes.
Federal Criminal Penalties for Stock Broker Fraud
Defendants may also face federal criminal and civil actions for alleged involvement with broker fraud schemes. 18 U.S. Code Section 1348 imposes a maximum sentence of 25 years to life in prison for attempting or executing a fraud scheme in connection with securities and commodities.
Brokers can also be charged with postal or wire fraud, each of which carry maximum possible penalties of 20-30 years incarceration depending upon whether a financial institution was defrauded.
Federal charges are often more serious than state offenses and you need an attorney who has successfully handled federal court cases related to stockbroker fraud. Bukh Law Firm, PLLC has a long history of defending clients accused of all type of federal offenses and can assist in developing a successful defense or negotiating a favorable plea agreement.
A Stockbroker Fraud Lawyer Can Help
Don’t jeopardize your future by not having a good lawyer when you are accused of broker fraud. Contact Bukh Law Firm, PLLC today for help.
