Those working in the financial sector must follow all applicable laws and regulations. Failure to abide by these laws can open violators up to both criminal and civil penalties. If you lost money because another party committed securities fraud, an experienced securities fraud attorney can help you take legal action to recover compensation.
At Meyer Wilson, we are aware of all the ins and outs of both Texas and national securities fraud laws and keep up to date with changes. In our 25-year history, we have assisted countless victims of securities fraud in recovering damages. Reach out to us today to schedule your free case evaluation with one of our investment fraud lawyers serving Texas.
Texas Securities Fraud Statute
In Texas, investors are protected from securities fraud by both state and federal laws. The state laws are outlined in the Texas Securities Fraud Statute. Prohibited acts include engaging in any form of fraudulent or deceptive activity surrounding the sale of securities.
Under Texas law, securities fraud can include misrepresentation of the value of a security by presenting false or misleading information or by the omission of critical details. Anyone who commits securities fraud can face criminal charges. In addition, they will also open themselves up to FINRA arbitrations or civil lawsuits from investors who suffer damages.
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Common Securities Fraud Schemes in Texas
Securities fraud can take a variety of forms. While there are some common forms of fraud that occur frequently and have been in use for years, fraudsters are constantly coming up with new ways to scam investors out of their money.
One of the best-known securities fraud schemes is the Ponzi scheme. In a Ponzi scheme, the fraudster takes money from investors with the promise of big returns. They then sign up additional investors and use the money they invested to pay the initial investors.
As early investors continue to see positive returns and the next wave of investors start seeing gains in their investments, it becomes easier to draw in new investors. The pattern of paying earlier investors with the money invested by newer investors continues until it reaches a point where there are not enough new investors to pay the old investors.
Because of the way these Ponzi schemes are built, they all eventually collapse. However, in extreme cases, this can take years and involve thousands of investors. When the dust has settled, the fraudster has cleared a significant amount of money, while their victims end up suffering substantial losses.
In a pump-and-dump scheme, a fraudster works to artificially inflate the value of a stock or investment by recommending it to others, either directly or indirectly, with the use of misleading or untrue information. After driving the price of the security up significantly, they will then sell off their shares and cause the price to collapse.
Everyone who still has their money invested in the security based on the information from the fraudster will suffer significant losses, while the perpetrator of the scheme will end up turning a significant profit.
While Ponzi schemes and pump-and-dump schemes are the most common forms of securities fraud, they are far from the only fraud schemes out there. If you were the victim of any form of securities fraud, an experienced attorney can help you file a claim against the liable party to recover the money you need and deserve.
Criminal Penalties for Securities Fraud in Texas
Any form of securities fraud is considered a felony in Texas. However, the degree of the felony will vary depending on the severity of the crime. If the offense involves less than $10,000, the offender will be charged with a third-degree felony. The penalties for this charge can include:
- Two to 10 years in prison
- A fine of up to $10,000
If the offense involves an amount between $10,000 and $100,000, it will be charged as a second-degree felony. The penalties for this offense may include:
- Two to 20 years in prison
- A fine of up to $10,000
If the offense involves more than $100,000, it will be charged as a first-degree felony. The penalties for this offense may include:
- Five years to life in prison
- A fine of up to $10,000
In cases where a defendant violates a “cease and desist” order to stop carrying out fraudulent securities activities, they can be charged with a state jail felony. The penalties for this offense may include:
- Up to two years in prison
- A fine of up to $5,000
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Civil Penalties for Securities Fraud in Texas
Beyond the criminal charges that may accompany an offense, an investment broker or financial advisor can also face arbitrations or lawsuits from those they have defrauded. If you were the victim of any form of securities fraud in Texas, you may be able to recover compensation for your losses from your financial advisor or the firm where they work.
An experienced securities fraud attorney can help you pursue legal action to recover the compensation you need and deserve.
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Get Help from an Experienced Securities Fraud Lawyer Serving Texas Today
After falling victim to a securities fraud scheme, you may be able to recover compensation for your losses. At Meyer Wilson, we have an award-winning team of securities fraud lawyers who have used their 75+ years of combined experience to win over $350 million in damages.
Contact us by phone or through our website today to schedule a free case review with a member of our legal team.
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