Securities law covers the area of investments in businesses. These can take the form of equity securities, debt securities or a package of loans or assets that is sold to a financial institution or investor group. The law is part transactional, part regulatory and part litigation.
Securities law includes such areas as insider trading; protecting 성범죄전문변호사 confidential information; a company’s duty to disclose material facts; and securities fraud.
Regulation
Several statutes govern the sale of securities. The Securities Act of 1933, for example, makes it illegal to sell securities without complying with federal law. The Act also requires registration of securities exchanges, brokers and dealers, transfer agents, clearing agencies, and investment companies. The SEC issues a variety of regulations and interpretive guidance that clarify the meaning of these laws, and these documents can be found on the SEC’s website or through legal research databases such as Bloomberg Law.
The SEC’s primary role is to investigate and bring civil actions against individuals suspected of violating securities laws. The agency gathers evidence of possible fraud through surveillance operations and tips from investors or industry organizations. It can then choose to settle a case before filing a complaint or proceed with an administrative or criminal action in U.S. district court.
The SEC also oversees the operation of financial market participants through self-regulation programs. These programs are governed by rules passed by the SEC and enforced through private enforcement actions brought by investors. In addition, the SEC has power to promulgate laws that help uphold basic Congressional acts such as the 1934 Act’s prohibition on fraudulent sales of securities. These laws may cover specific topics such as insider trading, where a person trades shares of a publicly-held company while in possession of material nonpublic information in violation of his or her duty to withhold that information from stockholders.
Litigation
Recent high profile cases, such as those involving Enron and Bernie Madoff’s Ponzi scheme, have brought renewed interest to the field of Securities law. The complexity of state and federal regulations and the potential for substantial damage awards make it critical to have an experienced Securities litigation attorney on your side.
In addition to defending against class actions and shareholder derivative suits, securities lawyers are also involved in both transactional and regulatory practice. When a business offers its shares for public investment, securities attorneys help the company prepare and negotiate documents; analyze and evaluate the tax implications of each option; ensure compliance with all required disclosures to investors; and provide ongoing advice in the form of periodic reports and mandatory information filings.
The SEC has the power to pursue civil enforcement action against any person or company that commits a securities violation. The penalties for these violations can include fines, prison time, disgorgement orders, and more. Wilson Sonsini has a highly respected team of attorneys that has successfully defended clients in complex and high stakes securities litigation. Between 1996 and May 2022, our litigators have convinced plaintiffs’ lawyers to abandon more than 156 securities claims and won dozens of motions to dismiss, judgments on the pleadings, and summary judgments.
Our lawyers regularly appear in state and federal courts and have represented clients in cases involving the Foreign Corrupt Practices Act, insider trading, securities fraud, forged financial documents, and other allegations of wrongdoing. Our team’s SEC enforcement litigation prowess has earned us recognition in legal industry rankings and accolades such as Chambers USA, BTI Litigation, and The Recorder.
Compliance
Securities law encompasses the rules and regulations that govern how companies issue securities. A security can be shares of stock, bonds, a package of loans or mortgages offered for sale by a financial institution, or other financial instruments representing investment in a company or international project. The value of a security is determined by its legal claim on the assets and earnings of the company that issues it. Securities laws are in place to protect investors by establishing strict regulations against fraudulent practices and ensuring transparency in the market.
Securities compliance requires careful adherence to the regulations established by federal agencies and state “blue sky” laws as well as the rules set forth by self-regulatory organizations like FINRA. Failure to adhere to these requirements can result in fines, sanctions, and a loss of investor confidence. Whether you are an investor, broker-dealer or financial professional, Hoeg Law can help you navigate the complex network of regulations to ensure compliance.
We specialize in business law, including securities regulation compliance. Contact us today for a consultation on how we can help you comply with the numerous regulations that regulate your industry. We can help you avoid costly mistakes and keep your focus on expanding your business. Our firm can also represent you in the event of a securities-related dispute. We have experience with investor claims, fraud and other disputes related to the securities industry.
Regulatory Oversight
The Securities Exchange Act of 1934 requires that publicly traded companies provide investors with a wide range of information about their business. Failure to disclose or misrepresent this information can result in the issuance of cease and desist orders or civil enforcement actions.
The Investment Advisers Act of 1940 requires that persons who compensate others for advising them on the purchase or sale of securities must register with the SEC and conform to certain regulations designed to protect investors. The SEC also regulates the activities of federally registered investment advisers by requiring them to file periodic reports.
In addition, the SEC has extensive powers to investigate and prosecute violations of securities laws. It brings numerous civil enforcement actions against firms and individuals involved in financial misconduct each year, usually in conjunction with federal law enforcement agencies such as the Justice Department.
For example, in early September, the SEC voted to approve new rules increasing disclosure requirements for special purpose acquisition companies (SPACs), which are used to raise money in an initial public offering. These SPACs must now provide more detailed information about their operations and the financial condition of their underlying businesses in order to avoid regulatory action.
In the area of investor protection, the SEC has a number of different enforcement initiatives underway, including investigations into market participants’ compliance with anti-money laundering laws and the creation of a national cryptocurrency task force to combat criminal misuse of virtual currencies like bitcoin. In addition, the SEC and other federal agencies have a number of administrative enforcement tools at their disposal, such as subpoenas and search warrants.