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What legal defenses exist for complex securities fraud cases?

On Behalf of | Oct 15, 2024 | Criminal Law

Securities fraud cases are often complicated, involving allegations of misleading investors or manipulating financial markets. In Texas, those accused of securities fraud face serious penalties, including hefty fines and prison time. 

Understanding the available legal defenses can make a difference in the outcome of these cases.

Lack of intent to defraud

One possible defense for securities fraud is proving a lack of intent to defraud. Prosecutors must show that the accused knowingly engaged in fraudulent behavior to deceive investors. If the defense can demonstrate that any misleading statements or actions were unintentional or made without knowledge of their falsehood, the charges may be reduced or dismissed.

Reliance on expert advice

Another defense involves relying on the advice of financial experts or legal professionals. If the accused acted based on the guidance of an expert, it can show that there was no intent to commit fraud. This defense can be effective if the expert’s advice was reasonable and given in good faith, suggesting that the accused believed their actions were lawful.

Lack of material misrepresentation

To prove securities fraud, prosecutors must establish that there was a material misrepresentation—a false statement significant enough to influence an investor’s decision. If the defense can show that any misstatement was not material or that it did not influence investors, the case against the accused may weaken. This defense argues that the alleged misinformation had little to no impact on investor decisions.

Complex securities fraud cases require a strong defense to navigate the legal system and fight the charges.