SEC increasing focus on microcap fraud, other offenses
The most recent recession and collapse of the banking industry led a lot of government agencies to re-examine some of their oversight activities. Many learned that they need to pay closer attention to what was happening in order to prevent more widespread problems from occurring.
The Securities and Exchange Commission (SEC) recently announced that it has created several new groups to fight various white collar crimes that might be occurring within the financial industry. Instead of focusing all of its attention toward insider trading, the SEC has created new task forces to deal with other activities that may be placing investors at risk.
One task force is specifically designed to focus attention on microcap fraud, which commonly occurs as part of a "pump and dump" type of practice by brokers. This means that certain individuals purchase large quantities of shares in a company, and then make statements about how valuable the stock could become. This causes investors to potentially pay inflated shares for the prices. Once these stocks are purchased, the investors are left holding on to shares in a company that will have difficulty fulfilling the lofty expectations that were promised.
Another task force is going to monitor accounting and financial reporting fraud, which will focus on the financial statements that are being submitted. This allows the agency to review these documents to determine if there is anything unusual or different from other similar corporations. The group will employ individuals from across the country, with extensive backgrounds and experience in handling these types of issues.
The SEC is also creating a Center for Risk and Quantitative Analytics, which will review data to determine if there is any potentially dangerous activities happening that could harm investors. If any irregularities appear, further investigation could be done to determine if any illegal activity is occurring.
White collar crimes can carry significant prison time, as well as large fines. Since the SEC is committing more oversight to these areas, it is expected that more financial professionals will be facing these kinds of charges.
Being convicted of one of these offenses will often make a person unable to work again in the financial industry. If you have been accused of a white collar crime, speak to an experienced criminal defense attorney about defending yourself against the prosecution's case.
It is important to work with an attorney who has familiarity with these types of cases, because the matters can be quite complicated. It will often require an extensive analysis into a financial paper trail to determine the potential defenses that may be available.