Financial regulators protect the integrity of the financial system and its investors, and they achieve this by enforcing a complex web of laws and regulations designed to deter and punish white-collar crime. These crimes can range from insider trading and securities fraud to embezzlement and mortgage fraud. If you’ve been accused of or are being investigated for any white-collar crime, be sure to talk to white-collar crime lawyers right away for help.
Ask Experienced White-Collar Crime Lawyers: How Do Financial Regulators Enforce White-Collar Crime Law?
Regulators can subpoena documents, interview witnesses, and conduct forensic accounting reviews to gather evidence of potential wrongdoing. This allows them to build a strong case before pursuing civil or criminal charges. When a violation is suspected, regulators have a choice of enforcement tools. Civil enforcement actions are a common tactic, and these actions seek non-criminal remedies, such as financial penalties or industry bans.
However, in cases where the misconduct is egregious or involves intentional fraud, criminal prosecution may be pursued. Regulators can then work alongside criminal justice authorities like the Department of Justice (DOJ) to build a criminal case and secure convictions, and these prosecutions can result in large fines and imprisonment as well as destroying the reputations of individuals and companies alike.
Who Pursues White-Collar Crime?
The specific agency responsible for enforcement varies depending on the nature of the alleged crime. The Securities and Exchange Commission (SEC) is a powerful watchdog that oversees securities markets and corporate governance, but there are other agencies that may also be involved.
The SEC
The Securities and Exchange Commission (SEC) is a major player in white-collar crime enforcement. This federal agency has extensive authority to investigate and prosecute a wide range of misconduct involving publicly traded companies and investment products. Some key areas of SEC enforcement include:
Insider Trading
The SEC aggressively pursues those who trade securities based on non-public, material information. This unfair practice undermines investor confidence and market integrity.
Securities Fraud
This broad category describes any deceptive or manipulative scheme designed to mislead investors. It can involve actions like misrepresenting financial statements, orchestrating “pump and dump” schemes, or engaging in accounting fraud.
Market Manipulation
Attempts to artificially influence securities prices, often for personal gain, also fall under the SEC’s purview.
Ponzi Schemes
These fraudulent investment schemes, which promise high returns with little risk, are a classic target for SEC enforcement action.
Other Key Players
The Department of Justice (DOJ)
For severe cases of financial fraud, the DOJ may initiate criminal prosecutions in collaboration with regulatory agencies. DOJ prosecutions can usually call for the most severe penalties when someone is convicted, including lengthy prison sentences.
Commodity Futures Trading Commission (CFTC)
The CFTC oversees complex derivatives markets, seeking to prevent fraud and manipulation that can distort prices and harm investors.
Financial Industry Regulatory Authority (FINRA)
This self-regulatory organization plays a front-line role in monitoring broker-dealers and ensuring adherence to ethical and legal standards. The FINRA can impose fines, suspensions, and industry bans for rule violations.
The Importance of Proactive Defense
Facing allegations of white-collar crime is a serious matter with potentially life-altering repercussions. When an individual or company becomes the target of an investigation, it’s absolutely essential to immediately take a defensive stance with the help an experienced white-collar crime attorney. Find out more about what an experienced white-collar crime lawyer can do.
Defense Strategies in White-Collar Crime Cases
Experienced white-collar crime defense attorneys can call upon a range of defense strategies on your behalf, depending on the nature of the allegations and the specific facts of the case. Some common defense tactics include:
Challenging Intent
If the defense can demonstrate a lack of intent, it will undermine the prosecution’s case. For example, if a trader made a questionable trade based on what they genuinely believed was public information, it gets hard to prove they intended to defraud. While this defense may not protect from all fines and other regulatory penalties, it can be effective at helping you stay out of jail.
Good Faith Reliance on Advice
In cases involving complex regulations, defendants may argue that they relied in good faith on the advice of attorneys, accountants, or other professionals. Establishing this reliance can potentially negate intent, as well.
Lack of Knowledge
White-collar crime schemes can sometimes involve multiple individuals, and it’s not uncommon for those committing the crime to do so in a way that casts the blame on an innocent and ignorant member of the group. It may be possible to argue that a defendant was unaware of the broader fraudulent activity, especially if they worked in a large organization.
Cooperation with Authorities
In some instances, early cooperation with investigators can potentially mitigate the consequences of a white-collar crime conviction. Cooperation may include providing information, assisting with the investigation, or even testifying against co-conspirators.
Don’t wait: if you even suspect you’re under investigation, get a defense lawyer on your side right away to start building a strategy.