Securities Fraud Lawyer
When you hear the phrase security fraud, you most often think of people who are very rich are overpaid and they come up with these complicated and illegal schemes to get money and then they go to jail for white-collar crime. However, most of the people in California that are accused of security fraud are very different, even if you are simply a small entrepreneur trying to raise money for your business or an employee doing what your boss asked for, you can find yourself with a securities fraud charge.
The criminal penalties for securities fraud are surprisingly tough, and in California these are wobblers which means they may be prosecuted as misdemeanor or felony depending upon a lot of factors such as the judge you’re going before that day.
So first things first, what are security fraud laws?
The first and foremost thing that your securities fraud lawyer in San Francisco CA such as the ones available at The Morales Law Firm is going to tell you, is that you cannot be involved in security fraud in California unless you are involved in securities in the first place. So what are securities?
Sadly there is not an easy way to answer the question of what securities is because the California Supreme Court has said the definition of security is going to be decided on a case-by-case basis, which means that there is not an easy rule for figuring out whether something is considered a security in California. However there is a general definition that you can use, a security is a business arrangement under which somebody gets ownership stake in the business for the right to repay a debt.
Therefore there are some types of securities that you can just assume are going to always be considered securities, and this is not an exhaustive list is a good list to look at:
- Stock in a corporation
- A note showing that the company owes money to a person that holds the note
- A certificate which shows the holder has an interest in some kind of profit sharing arrangement with the company
- An interest in limited liability company
- A limited partners interest in a limited partnership
An example of a business transaction that is governed by security fraud laws is below:
William invents a pill that causes everyone to lose weight. When he wants to sell this pill he has no money to start producing or marketing it so he puts an ad up asking for people to invest money in his company, and for every $1000 to somebody receives a share of the company and a right to the portion of the profits it will make. This means William is selling securities to his investor.
But security laws are not going to apply every time that somebody goes into business together, and it is not going to be security when the people investing in the business are going to be involved in running it.
Talk to your securities fraud lawyer if you have any questions about what securities are and whether you’ve committed fraud.