Everyone has probably heard of Bernie Madoff. He was at one time one of the most premiere and well-respected investment managers in the country. He had a very public and fulfilling career on Wall Street and even served as chairman of the NASDAQ stock exchange for a while. Then, in December 2008, Madoff was arrested for running the largest Ponzi scheme ever discovered. Madoff stole over $20 billion from investors all over the country. Every single investor lost everything they had trusted him with. Madoff is now serving 150 years in prison.
Madoff was guilty of securities fraud, which is also commonly referred to as stock fraud or investment fraud. Securities fraud is when investors are convinced to make investment and purchase decisions based on wrong information that typically leads to financial losses. Since the Madoff scandal, there has been a serious crackdown on suspicious and illegal activity.
In 2014, there were 1639 securities and commodities fraud cases pending and another 633 corporate fraud cases pending. In each case, those with pending charges need a securities fraud lawyer to represent them. Because this is such a particular area of law, it is vital to choose a lawyer that specializes in securities fraud cases. A securities fraud lawyer will understand all the ins and outs of the laws and whether or not they were broken. They will be better prepared from the start than say an injury attorney, a business attorney, or simply litigation attorneys.
In 2012, the Securities Commission filed 734 actions and were able to collect orders for $3.1 billion in disgorgement and penalties paid out by those individuals and companies accused of the fraud. In 2013, the Commission filed 686 actions and was able to collect orders for $3.4 billion. This amount has continued to grow. I n 2014, the Commission filed 755 actions and received orders of $4.16 billion in penalties and disgorgement.
When it comes to Ponzi schemes, it starts with one person who starts recruiting others who are required to invest a certain amount to join the investment group. Each recruit then has to recruit others who also make investments. If for example, a recruit then recruits ten people, the first recruit will earn the money back on their investment. However, only the people at the top of the pyramid make money, which is why it is a scheme.
Several big businesses, banks, even countries have been cited for securities fraud violations. In 2014, The SEC filed charges against three Morgan Stanley Firm entities. They were each accused of providing misleading information to investors regarding some mortgage loan statuses that were delinquent. Morgan Stanley ended up paying $275 million to harmed investors in a settlement agreement.
Also in 2014, the SEC filed more charges against the Bank of America, which were related to charges already filed regarding the company?s failure to inform investors throughout the financial crisis about known insecurities. The company paid $20 million in penalties. Finally, in 2015, the SEC charged the Deutsche Bank AG with reporting inaccurate information on financial reports throughout the crisis. That bank paid out $55 million in penalties.
In each of these cases, it is on the burden of the bank or individual to prove they did not intentionally misinform or mislead investors, which can be tricky. A securities fraud lawyer can help their client navigate those waters and get the best deal possible given the circumstances of their situation.
Each case and each situation are unique, so the outcome of one cannot be assumed based on the results of another. In some cases, even if the company did not intend to mislead investors, they may still be in legal trouble, which is just one more reason securities fraud lawyers are so important.