Securities fraud intake

Legal information only. Securities law and parallel civil/criminal enforcement are among the most complex areas of federal law. This intake provides general orientation only. Contact a securities defense attorney before any contact with the SEC, FINRA, or DOJ. See our full disclaimer.

Securities fraud case intake form

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Securities fraud matters require attorneys with specific SEC, FINRA, and DOJ securities experience. Coordinating across parallel civil and criminal proceedings is a specialized skill. Free, strictly confidential consultation.

How SEC civil and DOJ criminal investigations work together

The SEC brings civil enforcement actions seeking disgorgement of profits, civil penalties, and industry bars. The DOJ (often working with FBI agents) brings criminal charges seeking prison sentences. These agencies regularly share evidence, coordinate timing, and use each other's leverage strategically - for example, the SEC may bring civil charges first to establish findings that make criminal prosecution easier, or the DOJ may hold off charges to let the SEC gather evidence through civil subpoenas that wouldn't be available in a criminal investigation.

For defendants, this dual-track system creates a dilemma: cooperating with the SEC civil investigation (by providing documents and testimony) helps manage civil liability but potentially feeds evidence to the DOJ for criminal prosecution. Asserting Fifth Amendment rights in the SEC investigation protects criminal exposure but results in adverse inferences in the civil case. Navigating this requires an attorney with experience in both SEC enforcement and federal criminal defense - a generalist criminal attorney without SEC-specific experience is often inadequate for securities matters. Review the white collar defense screener for broader federal investigation context, and the federal sentencing guidelines tool to understand criminal sentencing exposure.

What is a Wells Notice and what do you do when you receive one?

A Wells Notice is the SEC's formal notification that the enforcement staff intends to recommend charges against you and is giving you an opportunity to respond before the recommendation goes to the Commission. Receiving a Wells Notice is a significant escalation - you have typically 30 days to submit a "Wells submission" (a written argument against charging) or to negotiate a settlement. This is one of the most important and time-sensitive moments in any SEC investigation: a well-crafted Wells submission can sometimes prevent charges entirely, while a poorly handled response can make things worse. An experienced SEC defense attorney should be retained immediately upon receiving a Wells Notice.

How is insider trading actually proven?

Insider trading cases are built on trading records, communications (emails, texts, phone records), and circumstantial evidence showing the timing of trades relative to the acquisition of non-public information. The government looks for: trades made shortly before public announcements, unusual option activity, communications between the trader and someone with inside access, and deviation from the defendant's normal trading patterns. The "material non-public information" element requires the government to show the information was both non-public (not generally available to the market) and material (would have significantly affected a reasonable investor's decision). Tippee liability requires showing the tippee knew or should have known the information was obtained through a breach of duty, which is frequently a contested element in tipper/tippee cases.

Frequently asked questions about securities fraud cases

Federal criminal securities fraud (18 U.S.C. § 1348) has a 5-year statute of limitations from the date of the offense. SEC civil enforcement actions have a 5-year limitations period for fraud claims (extended to 10 years under the FAST Act for some claims). The clock on the limitations period can be complex to calculate, particularly in ongoing schemes where each fraudulent act may be a separate violation with its own limitations period. Statute of limitations defenses are raised but often require careful analysis of when the government had or could have had enough information to bring a claim.

Not for the SEC civil violations themselves - SEC civil enforcement results in fines, disgorgement, and industry bars, not prison. However, conduct that violates SEC regulations often also violates criminal statutes (wire fraud, securities fraud under 18 U.S.C. § 1348, or the Securities Exchange Act's criminal provisions), which can result in prison through separate DOJ prosecution. The same factual conduct can produce both an SEC civil proceeding and a DOJ criminal prosecution simultaneously, with prison available only through the criminal track.

An industry bar (also called a permanent bar) is an SEC or FINRA sanction that prohibits an individual from associating with any broker-dealer, investment adviser, or other SEC-registered entity - effectively ending a career in the securities industry. Bars can be permanent or for a specified period. FINRA bars are imposed separately from SEC bars but have similar practical effect. Industry bars are available as civil sanctions independent of any criminal prosecution, and can be imposed even for conduct that doesn't result in criminal charges. For securities industry professionals, an industry bar is often the most devastating career consequence of an enforcement action.

The SEC can seek disgorgement of ill-gotten gains plus civil penalties of up to 3 times the profit or loss avoided (a "treble damages" type of calculation). The Supreme Court in Liu v. SEC (2020) limited disgorgement to actual net profits (not gross revenues without deductions for legitimate expenses), but the SEC can still compound disgorgement with substantial civil penalties. In large-scale fraud cases, the total civil monetary exposure including penalties can substantially exceed the actual financial gain - which is why settling SEC cases often involves complex negotiations over which categories of payments count toward overall liability.

Generally yes, with important caveats. Trading based on publicly available information, market rumors, or independently developed analysis is legal. Insider trading requires specific elements: the information must be material and non-public, and it must have been obtained through a breach of a duty of trust (by a corporate insider sharing it in violation of their duties) or misappropriated from someone to whom the trader owed a duty. Overhearing a conversation in a public place about which the speaker owed you no duty of confidentiality is generally not insider trading, though the SEC has brought cases in borderline scenarios. What often matters is whether the source of the information breached a duty by sharing it and whether you knew or should have known this.