Federal Securities: Criminal Liability

Question 1

Federal Securities
Criminal Liability
1933 Act & 1934 Act

Answer 1

1933 Act
- liable for “willful violation” of any provision of 1933 act
- Penalties: up to $10,000 fine and/or 5 years of jail
1934 Act
- liable for “willful violation” of any provision of 1934 act
- Penalties: up to $2,500,000 fine and/or 20 years of jail ($25M if a firm)
- penalties are cumulative and can be imposed on top of civil liability.
- SEC refers the case to the justice department

Question 2

Federal Securities
Criminal Liability
SoX

Answer 2

“Whoever knowingly executes, or attempts to execute, a scheme or artifice shall be fined under this title, or imprisoned not more than 25 years, or both.”
- defraud in connection with a security
- obtain, by means of fraudulent pretenses, representations, or promises, any money or property in connection with a class of stock
Additional
- Willful failure to retain audit workpapers for 5 years by 10 years jail and fine
- Destruction of records involved in any federal matter or bankruptcy, fine, 20 years jail, or both
- corrupt tampering with documents to be used in official proceeding, fine, 20 years jail, or both