Securities fraud – also commonly known as investment fraud in the UK – is a matter of utmost concern for lawmakers and law enforcement alike, not least because of the serious impact the crime has on the public’s faith in the financial and banking systems. The implications of being charged with such an offence can be deeply unsettling, particularly if that charge is your first interaction with the legal world. In this article, we explore the offence of conspiracy to commit securities fraud in England and Wales, offering insights into the offence’s definition and elements, providing illustrative examples, and addressing common concerns that first-time offenders often have.
What is the offence of conspiracy to commit securities fraud?
Conspiracy to commit securities fraud in England and Wales is a criminal offence under the Fraud Act 2006. To secure a conviction for this offence, the prosecution must prove:
- Agreement – the prosecution must demonstrate that there was a clear and unequivocal agreement between two or more individuals to engage in fraudulent activities related to securities. This agreement can be explicit or implicit, but there must be a meeting of minds with the intent to commit securities fraud.
- Intention – it must be established that the individuals involved in the conspiracy had the intention to deceive others for financial gain or to cause financial loss to others. In other words, they must have knowingly planned to engage in dishonest activities related to securities.
- Conduct – this element requires that there was an overt act or some form of conduct in furtherance of the conspiracy. It doesn’t necessarily have to be a completed act of securities fraud, but there must be evidence of steps taken towards committing the fraud. These actions could include making false statements, manipulating stock prices, or spreading false information to investors.
- Securities – the conspiracy must be specifically related to fraud in securities, which involves deceptive practices in connection with buying or selling securities such as stocks, bonds, or other financial instruments. This can include insider trading, market manipulation, false statements, or other fraudulent activities in the securities market.
- Participation – the prosecution must identify and prove the involvement of each conspirator. This includes showing their knowledge of the conspiracy, their role, and their active participation.
Conspiracy charges can be extremely complex, as they often rely on circumstantial evidence and the actions and intent of many individuals. That said, if the prosecution can nonetheless prove these elements beyond a reasonable doubt, conviction may follow.
What are some examples of conspiracy to commit securities fraud?
Examples of this offence include:
- Insider trading – a group of individuals, including corporate insiders (e.g., executives, employees), conspire to trade securities based on non-public, material information.
- Pump and dump schemes – a group conspires to artificially inflate the price of a particular security through false or misleading statements, often disseminated through spam emails or online forums. Once the price is sufficiently inflated, they sell their holdings at a profit, leaving other investors with worthless shares.
- Front-running – traders or brokers conspire to execute securities transactions for their own benefit ahead of pending orders from their clients. This unethical practice can lead to significant financial losses for the clients.
- Churning – stockbrokers or investment advisors conspire to excessively trade in a client’s account to generate commissions for themselves, even if it is not in the best interest of the client.
- Accounting fraud – executives and employees of a publicly traded company conspire to manipulate the company’s financial statements, typically by inflating revenue or understating expenses.
- False information – individuals conspire to spread false or misleading information about a company’s financial health or future prospects through various means, such as social media, press releases, or fake news articles.
- Market manipulation – traders conspire to manipulate the securities market by engaging in practices like ‘spoofing’ (placing and cancelling orders to create a false impression of market activity) or ‘wash trading’ (simultaneously buying and selling securities to create artificial trading volume).
- Unregistered securities – a group conspires to issue and sell securities without the necessary regulatory approvals or proper disclosures, deceiving investors about the nature of the investments.
What happens if you are suspected of conspiracy to commit securities fraud in the UK?
Here is a general overview of what typically happens if you are suspected of this offence:
- Investigation – the process usually begins with an investigation by the police or other financial bodies or agencies, such as the Financial Conduct Authority (FCA) or the Serious Fraud Office (SFO). They will gather evidence, interview witnesses, and examine financial records to build a case.
- Arrest – if the authorities have sufficient evidence or reasonable grounds to suspect your involvement in the conspiracy, you may be arrested.
- Questioning – you may be questioned by officers. It is generally advisable to consult with a solicitor before answering any questions.
- Release or detention – depending on the seriousness of the allegations and the likelihood of flight or tampering with evidence, you may be released on bail or under investigation with certain conditions, such as surrendering your passport or reporting to a police station regularly. In more severe cases, you may be remanded in custody pending trial.
- Charging – if the evidence supports it, you may be formally charged with conspiracy to commit securities fraud. At this point, you will receive a document called a ‘charge sheet’ outlining the specific allegations against you.
- Court proceedings – your case will proceed through the criminal justice system. You will appear in court, and legal proceedings will begin. You will have the opportunity to enter a plea, either guilty or not guilty.
- Trial – if you plead not guilty, your case will go to trial. The prosecution will present evidence, and your defence team will have the opportunity to challenge that evidence and present your side of the case.
- Sentencing – if you are found guilty, you will proceed to the sentencing phase. Sentences for conspiracy to commit securities fraud can vary widely depending on the circumstances of the case, but they may include imprisonment, fines, and other penalties.
Being suspected of a crime does not mean you are automatically guilty, and you have the right to a fair trial and legal representation throughout the process. Engage an experienced criminal defence solicitor to protect your rights from the outset.
What is the sentence for conspiracy to commit securities fraud in the UK?
Under the Fraud Act 2006, a conviction for conspiracy to commit securities fraud carries significant penalties. Those found guilty face imprisonment, with the length of the sentence determined by the gravity of the offence, the defendant’s role, previous criminal history, the amount of financial harm caused, and other factors. Sentences may be as high as 10 years’ imprisonment.
Fines, disqualification from serving as a director or in specific financial roles, restitution to victims, community orders, and probation are all potential components of the sentence.
Are there any defences to conspiracy to commit securities fraud?
Potential defences include:
- Lack of intent – the prosecution must prove there was intent to defraud investors or engage in market manipulation to secure a conviction. One potential defence could argue there was no actual intent to deceive or commit fraud.
- Withdrawal – if one of the co-conspirators withdrew from the conspiracy before any overt acts were taken in furtherance of the scheme, they may be able to avoid liability by arguing withdrawal.
- Statute of limitations – there are time limits on how long after a crime prosecutors have to bring charges. If that limit has expired, it could be argued the charge is prohibited.
- Lack of agreement – the defence could claim the conversations were just idle talk or hypothetical and did not constitute a true agreement to commit securities fraud. There must be intent to agree and participate.
- Entrapment – if the scheme was proposed or encouraged by government agents, the defence could claim entrapment into committing a crime the defendant otherwise would not have.
Evidence is critical in conspiracy to commit securities fraud cases, just as it is in any other criminal case. To stand the best chance of a successful defence, engage an expert criminal defence solicitor as early in the process as possible.
Will I go to prison if it is my first time committing conspiracy to commit securities fraud?
Whether a first-time offender will go to prison for conspiracy to commit securities fraud depends on a range of factors. These include the gravity of the offence, individual involvement, mitigating circumstances, and the judge’s discretion.
More complex or damaging schemes tend to result in harsher penalties. However, factors like limited involvement, cooperation with authorities, and expressions of remorse can work in your favour to reduce the likelihood of a prison sentence.
Seeking guidance from an experienced solicitor is imperative if you wish to navigate the trial and sentencing process with confidence.
Where to get further help
Facing criminal charges or prosecution is very stressful, no matter your background or other life experiences. It is natural to feel overwhelmed and concerned about what will happen next. To help you navigate the process effectively, get in touch with an experienced criminal defence solicitor who specialises in conspiracy to commit securities fraud. Contact us today for a free consultation about your options.
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