How Long Can You Go to Jail for Securities Fraud?
- Statutes such as 15 U.S.C. § 78j(b), 18 U.S.C. § 1348, and 18 U.S.C. § 371 provide for up to 20 years in prison for securities fraud.
- The U.S. Sentencing Guidelines (“USSG”) use the amount of harm caused by the fraud as the primary factor in determining the sentencing range.
- Sentences for securities fraud often range between 10 and 20 years in prison followed by 5 or more years of supervised release.
- Securities fraud can be charged in addition to other federal criminal offenses, such as mail fraud (18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and money laundering (18 U.S.C. §§ 1956, 1957).
- Consulting with a securities fraud defense attorney is imperative to safeguard your legal rights.
Securities Fraud
Securities law violations are a top priority for federal agencies. Recent high-profile cases of securities fraud have led to severe penalties, including decades in prison, for those found guilty. The Dodd-Frank Act and the Sarbanes-Oxley Act are notable examples of statutory reforms that have increased the length of prison sentences for securities fraud, which is a federal criminal offense.
Securities fraud is a broad term that encompasses a wide variety of activities but is generally used to describe deceptive practices in connection with securities trading or investing. Some examples of securities fraud include insider trading, market manipulation, Ponzi schemes, pyramid schemes, embezzlement, accounting fraud, and misrepresentation of material facts regarding securities. These examples of securities fraud can be further divided into two general categories:
-
Fraud Against Investors. This includes fraud against potential or current investors. Some examples are churning, unauthorized trading, false or misleading statements, failure to disclose material information, and the various forms of securities fraud discussed above.
-
Fraud Against Firms. This includes fraud against employers or firms. Some examples are market manipulation, the intentional mispricing of securities, insider trading, front running, and the inappropriate allocation of securities to favored clients.
Individuals and firms convicted of securities fraud could face severe penalties, including both criminal and civil penalties such as fines, disgorgement of profits, civil penalties, imprisonment, and civil and criminal forfeiture. The length of prison sentences for securities fraud crimes depends on the facts and circumstances of the case and the type of securities fraud committed.
Federal Securities Fraud Statutes
There are several federal statutes that address securities fraud. The primary federal securities law is the Securities Exchange Act of 1934, which prohibits various forms of securities fraud. In particular, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 prohibit the use of any manipulative or deceptive device in connection with the purchase or sale of any security. Put simply, this statute makes it illegal to deceive others to get them to buy or sell a security.
Federal securities fraud charges can also be brought under the general fraud statute, 18 U.S.C. § 1348, which prohibits the use of false or fraudulent pretenses in the purchase or sale of any security.
18 U.S.C. § 371 is the federal conspiracy statute and broadly criminalizes any kind of conspiracy to commit an offense against the United States. Under this statute, securities fraud can be charged as a conspiracy to commit securities fraud.
Federal Sentencing Guidelines for Securities Fraud
The U.S. Sentencing Guidelines (“USSG”) are rules that establish a uniform policy for individuals convicted of criminal offenses in federal court. The USSG are intended to assist federal judges in determining the appropriate prison sentence for each defendant based on a variety of factors and considerations, including the severity of the offense, the criminal history of the defendant, and whether the defendant has accepted responsibility for his or her actions. While the USSG are not binding law, the Supreme Court has held that federal judges must consider the USSG before imposing a sentence.
Sentencing for securities fraud is governed by USSG § 2B1.1. The USSG for securities fraud are complex and depend on a variety of factors, including the type of securities fraud committed, the amount of money involved, whether the defendant has accepted responsibility for his or her actions, and the criminal history of the defendant.
One of the most important factors in determining the sentence for securities fraud is the amount of money involved in the fraud. The USSG provide a table that assigns an “offense level” based on the amount of money involved. The offense level is then used to determine the sentencing range for the defendant. The more money involved in the fraud, the higher the offense level and the longer the prison sentence.
For example, the base offense level for securities fraud under the USSG is 6. If the amount of money involved is more than $6,500 but less than $15,000, the offense level is increased by 2 levels. If the amount of money involved is more than $15,000 but less than $40,000, the offense level is increased by 4 levels. If the amount of money involved is more than $40,000 but less than $95,000, the offense level is increased by 6 levels. If the amount of money involved is more than $95,000 but less than $150,000, the offense level is increased by 8 levels. If the amount of money involved is more than $150,000 but less than $250,000, the offense level is increased by 10 levels.
The USSG also provide for an increase in the offense level if the defendant has accepted responsibility for his or her actions. If the defendant has accepted responsibility for his or her actions, the offense level is decreased by 2 levels. If the defendant has not accepted responsibility for his or her actions, the offense level is not decreased.
The USSG also provide for an increase in the offense level based on the criminal history of the defendant. If the defendant has a prior criminal history, the offense level is increased. The more extensive the criminal history, the higher the offense level and the longer the prison sentence.
Maximum Prison Sentences for Securities Fraud
The maximum prison sentence for securities fraud is determined by the statute under which the defendant is convicted. For 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5, the maximum prison sentence is 20 years. For 18 U.S.C. § 1348, the maximum prison sentence is 25 years. For 18 U.S.C. § 371, the maximum prison sentence is 5 years.
In addition to the maximum prison sentence, securities fraud can also result in significant fines and civil penalties. For 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5, the maximum fine is $5,000,000. For 18 U.S.C. § 1348, the maximum fine is $1,000,000. For 18 U.S.C. § 371, the maximum fine is $250,000.
Minimum Prison Sentences for Securities Fraud
There is no minimum prison sentence for securities fraud. The minimum prison sentence is determined by the federal judge based on a variety of factors, including the USSG, the criminal history of the defendant, and whether the defendant has accepted responsibility for his or her actions.
Actual Prison Sentences for Securities Fraud
The actual prison sentence for securities fraud is determined by the federal judge based on a variety of factors, including the USSG, the criminal history of the defendant, and whether the defendant has accepted responsibility for his or her actions. However, there are some general trends in the prison sentences for securities fraud.
For example, the average prison sentence for securities fraud under 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 is about 4 years. The average prison sentence for securities fraud under 18 U.S.C. § 1348 is about 5 years. The average prison sentence for securities fraud under 18 U.S.C. § 371 is about 2 years.
Conclusion
Securities fraud is a serious federal crime that can result in significant prison time. The actual prison sentence for securities fraud depends on a variety of factors, including the USSG, the criminal history of the defendant, and whether the defendant has accepted responsibility for his or her actions. If you have been charged with securities fraud, it is important to contact an experienced federal criminal defense attorney to discuss your legal options.
Contact Spodek Law Group
If you are facing securities fraud charges or are under investigation, our legal team can help protect your rights and provide experienced guidance. Call us today at 212-300-5196 to schedule a confidential consultation.
