Corporations Code 25110, 25540, 25541

Securities Fraud in California

Securities Fraud

Securities Fraud in California – Table of Contents

Securities Fraud in California

Securities fraud in California is a white-collar crime involving the improper sale of stocks, cryptocurrencies or other securities fraud in California on the open market.

In California it is illegal to:

  1. Sell unqualified securities (securities not cleared by the government for sale) or securities exempt from qualification;
  2. Sell securities in a way that doesn’t meet qualifications;
  3. Give false or misleading statements in the sale of securities; or
  4. Engage in insider trading.

Securities fraud include stocks, notes, cryptocurrencies, interest in a company, and ownership of a company.

This is a very complex area of law, so it is vital to reach out to an attorney right away for help in your defense.

Trading Information

Insider trading is a high-profile crime that tends to get a lot of attention in the media. However, insider trading is simply using information about a stock or a company to your advantage, when you know that information is not available to the public. If you trade on a stock, by buying or selling, based solely on a special knowledge of the company, you have committed a crime.

The special relationship mentioned above can be an employment relationship or simply any relationship that provides you with non-public information. If someone inside the company tells you such information, and you trade Securities fraud in California on that information, you have committed insider information. The best defense to a charge of insider information is that you were able to come across the information in question on your own, indicating it may have been available to the public, and thus, not “inside” information.


Securities fraud California is a relatively new crime, in that the federal government and state governments chose to criminalize the fraudulent, misleading, or dishonest sale of securities frau on the market in order to protect investors and brokers.

Prosecuting Securities Fraud in California

The prosecutor must prove:

  • You sold “securities”;
  • You did so willfully;
  • The stock was unqualified or the sale did not meet qualifications;

Intentional Manipulation

Federal (SEC) and civil charges can follow these criminal charges.

Securities fraud can be charged as either a misdemeanor or a felony, making it a “wobbler” crime. Fines and jail time may also be heightened for a crime of this nature. Willful sale of, or even offering to sell, securities that are not in compliance with California law can land you in jail for a year and a half, in addition to a $1,000,000 fine.

Manipulating the market through misleading information regarding securities, including insider trading, can result in two, three, or five years in jail, in addition to a $10,000,000 fine.


Defending a charge of Securities Fraud requires the skills of a successful defense attorney. Your attorney may claim you lacked the criminal intent (willful) required to engage in securities fraud.

Was it Accidental or Negligent?

In order to act willfully, the prosecutor must prove you purposefully and knowingly sold or bought or offered to sell or buy unqualified securities. Accidental or negligent sales or purchases of securities cannot leave you criminally liable for securities fraud. Contrary to what is portrayed in the media, oftentimes those charged with securities fraud simply got mixed up in a transaction that did not quite meet qualifications, but they did not engage in the illegal transaction willfully because they had a good-faith belief in their qualifications.

For example, if you had a good faith belief the stocks were qualified, you cannot be convicted of Securities Fraud in California.

Good Faith

The good-faith belief defense is effective if you truly think you did not have to make sure your offering of securities met qualifications of the Department of Corporations. Even if you later discovered your sale needed to be qualified, you did not willfully sell the securities without meeting qualifications, so you cannot be held criminally liable.

We Want to Help

If you or a loved one is being charged with Securities Fraud in California, we invite you to contact us immediately for a free case review. Schedule an appointment to meet with us in person, or feel free to submit an evaluation online and we will get in contact with you ASAP. We can provide a free consultation in our office located in Century City, or by phone.

Our experienced and assiduous Los Angeles Criminal Defense Attorneys will be sure to fight until the end to reduce or drop your charges completely.

Call Us for a FREE Case Review: 310-274-6529

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Esfandi Law Group
Lara S.
June 4, 2018
Seppi had my case reduced to just an infraction, and thanks to him I was able to keep my job. Jorge was extremely helpful too, the reason I went with this law firm. Overall pleased.

How to Win Your Case

We cannot stress enough that you read, understand and follow these 10 basic rules if you are criminally charged or under investigation:

  1. Don’t ever talk to the police
  2. Do not discuss your case with anyone
  3. Everything you tell your lawyer is confidential
  4. Tell police you need to contact your attorney
  5. Never consent to any search by the police
  6. If the police knock on your door, don't answer!
  7. Realize the consequences of a criminal conviction
  8. Your lawyer (not you) will contact any witnesses
  9. Information on your cell phone is evidence
  10. Early Intervention is the key

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