Everything You Need to Know About Securities Fraud

In America, the corporate business world can be a fast-moving environment. This leads some upper-level executives to make mistakes when it comes to advancing in the market. In some cases, securities fraud is carried out by someone who doesn’t even know that what they’re doing is illegal. This is why it’s so important to understand securities fraud and the different ways it’s carried out. Recognized as the generic term for white-collar crimes, securities fraud covers a wide variety of illegal schemes.

The Common Forms of Securities Fraud

When it comes to securities fraud, there are three common forms: accounting fraud, insider trading, and misrepresentation. Each one of these forms can have serious penalties for those who are found guilty. Below, we break down each type, how it works, and the possible penalties.

Accounting Fraud

Whether it’s a mid-level accountant or a senior executive, pocketing money from payroll is a serious offense. However, it doesn’t have to occur at the corporate level to be classified as accounting fraud. For instance, if the treasurer of a club, association, or any other organization transfers funds into a private account, it could be classified as embezzlement and charged as accounting fraud, no matter what the intentions for doing so may have been.

Illegal actions have consequences, and the consequences vary based on the circumstances involved. In some cases, people found guilty of accounting fraud will face sentences for up to 20 years. Fines usually depend on the amount of money that was embezzled or lost.

Insider Trading

When it comes to working for a public company, sharing confidential information that could help benefit someone else’s financial status in the stock market is considered insider trading. While some might think this means they can’t share a new product announcement with friends, insider trading usually involves much more.

High-profile insider trading cases typically involve upper-level executives who share disclosed information in order to put even more money into their stocks. Sometimes it even means the distribution of funds into an account predicted to do well in the future. Actions of this nature could subject you to serious legal consequences if convicted. When it comes to penalties for insider trading, the maximum prison sentence for an individual found guilty is 20 years in federal prison. As for the maximum fine? $5 million.


Have you ever been approached by a salesperson who promised you a certain type of product, only to be given a different item in the end? This is an overly generalized example of how misrepresentation is carried out by top-level executives in the business world. This form of securities fraud usually takes place when a business person is trying to sell to a group of investors and is willing to promise just about anything to close the deal. The problem? The group of investors will quickly realize they have yet to see any of the benefits they were promised.

Much like accounting fraud, the penalties for misrepresentation depend a lot on the severity of the crime. If you’re dealing with a multi-million-dollar scheme, you could serve over a decade. However, if it was executed within a smaller scope, you could serve only three to five years.

Exercise Your Right to Legal Representation

If you were involved in a securities fraud scheme, you’ll want to make sure you’re represented fairly and honestly.

At Brad Bailey Law, our team of attorneys can assist any person who’s had the unfortunate experience of becoming engrossed in a securities fraud case. Our team brings over five decades of experience in helping clients get through white-collar crimes, federal crimes, and serious state felony charges.

For more information on how Brad Bailey Law can assist you in your securities fraud case, contact us today!