Securities fraud charges could result in serious penalties, including jail time. If you have been accused of securities fraud, you will need to decide what approach to take when responding to charges. You could fight to secure an acquittal if you do not believe the prosecutor can provide the proof beyond a reasonable doubt necessary to convict. You could also enter a guilty plea and hope for a lenient sentence.
One hedge fund manager opted for a guilty plea, and Reuters reports he ended up facing a very light penalty because of it. However, just because pleading guilty could sometimes mean your charges are reduced, this does not necessarily mean everyone accused should admit guilt.
A conviction can have life-changing reverberations, affecting career and reputation. Some guilty pleas will still result in incarceration. Because the consequences of admitting guilt can be serious, it is best to get legal help when deciding on an approach to take in dealing with your charges.
Should You Plead Guilty in Securities Fraud Cases?
The case reported on by Reuters involved a 28-year-old hedge fund manager who lost close to $57 million over the course of a three week period. The young man had been working as a former trading assistant at a unit of a hedge fund and he decided to move nearly all of the fund's portfolio into long, unhedged market options. Prices went the other way and the value of the options collapsed, causing massive losses.
The hedge fund manager overstated the performance of the hedge fund to investors, and he apparently made bad trades in an effort to try to erase some losses. He reportedly also lied to the Securities and Exchange Commission about some of the trades he had made.
When he was indicted for securities fraud, however, he reportedly began to cooperate immediately. He was 30 by the time the case made its way to court, and he took full responsibility for his actions. The prosecutor even indicated that his cooperation was "exceptional." He told the court his misconduct "was, and is, my responsibility to bear alone," before he was sentenced.
The court determined his cooperation, and the fact he had done all he could do to make things right, meant he should not be jailed for his crimes. Back in March, the judge had suggested he would likely sentence the trader to five years in prison. This was in line with both federal guidelines and with the recommendation made by the prosecutor. However, in the sentencing hearing, the judge ended up sentencing him only to probation. He will be required to repay $56 million to investors.
The case shows one possible outcome of pleading guilty to securities fraud, but it is not a common one and the sentence drew gasps in the courtroom when it was handed down. Still, there are times when a guilty plea could be your best option, as well as other situations where raising defenses could be a more viable alternative to achieve a better outcome.