Criminal securities fraud is charged under 18 U.S.C. § 1348, which reaches a scheme to defraud any person in connection with a security, or to obtain money or property by false pretenses in connection with the purchase or sale of one. It almost never travels alone: an SEC civil enforcement action commonly runs alongside, and each track affects the other.
Waxman Litigation acts for companies and their boards. Seth B. Waxman spent 13 years as an Assistant United States Attorney in the District of Columbia, roughly eight of them on fraud and public corruption.
What the statute reaches
Section 1348 reaches a scheme to defraud any person in connection with a registered security or a commodity for future delivery, or to obtain money or property by false pretenses in a securities transaction.
Whoever knowingly executes, or attempts to execute, a scheme or artifice— (1) to defraud any person in connection with any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78 l) or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78 o(d)); or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any commodity for future delivery, or any option on a commodity for future delivery, or any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78 l) or that is required to file reports under section 15(d)
18 U.S.C. § 1348
The SEC track
SEC enforcement is civil and seeks equitable relief; the criminal case is brought by the Department of Justice. The two tracks proceed on different timetables with different rules, and testimony given in one is available in the other. That interaction is the central strategic problem — see parallel criminal and civil proceedings.
The charges that usually travel with it
| Provision | Reaches |
|---|---|
| 18 U.S.C. § 1348 | Scheme to defraud in connection with a security |
| 18 U.S.C. § 1343 | Wire fraud — often charged for the same conduct |
| 18 U.S.C. § 1001 | False statements in a matter within federal jurisdiction |
| 18 U.S.C. § 1519 | Destroying or falsifying records to impede a federal investigation |
| 18 U.S.C. § 1956 | Money laundering, where proceeds are moved |
Frequently asked questions
Is an SEC inquiry the same as a criminal investigation?
No. They are separate proceedings by separate agencies, though they frequently concern the same facts and can run at the same time.
Should the company respond to the SEC while a criminal inquiry is open?
That is precisely the decision that requires the two tracks to be managed together.
What is the exposure for talking to investigators?
Statements in a matter within federal jurisdiction are covered by 18 U.S.C. § 1001, which is a separate offense from the underlying conduct.
Do we need to preserve documents immediately?
Yes — § 1519 applies in contemplation of a federal matter, not only once one is formally open.
Who can be charged with criminal securities fraud?
Whoever knowingly executes, or attempts to execute, a scheme to defraud any person in connection with a registered security or a commodity for future delivery, or to obtain money or property by false or fraudulent pretenses in connection with the purchase or sale of such an instrument, under 18 U.S.C. § 1348.
Why do the SEC and the Department of Justice both appear?
Because the same facts support two tracks. SEC enforcement is civil and seeks equitable relief; a criminal case under § 1348 is brought by prosecutors and carries imprisonment. The tracks run on their own timetables and neither waits for the other.
When must a criminal securities fraud charge be brought?
Within six years of the offense under 18 U.S.C. § 3301, which is longer than the five-year period that applies to most federal offenses under 18 U.S.C. § 3282(a).
Where are federal securities fraud charges arising in Washington, D.C. brought?
In the United States District Court for the District of Columbia, which under 28 U.S.C. § 88 is one judicial district with court held at Washington.
How do parallel proceedings change the response?
They make sequencing the central question. What is said to the SEC is available to prosecutors, and a statement made in the civil track carries its own exposure under 18 U.S.C. § 1001.
How much can a securities fraud conviction cost?
Section 1348 specifies imprisonment but leaves the fine to 18 U.S.C. § 3571, under which an individual found guilty of a felony may be fined up to $250,000 or the higher amount produced by the alternative measure in subsection (d). That criminal fine is separate from whatever the SEC seeks on the civil track.
Sources and legal authorities
General information about federal law, not legal advice, and not a prediction of any outcome. Federal criminal exposure turns on facts this page cannot assess. If your company has been contacted by investigators or has received a subpoena, take advice before gathering documents or interviewing staff.
Related: White-Collar Defense · Parallel Criminal & Civil Proceedings · Money Laundering · Government Subpoenas · Internal Investigations. Call (301) 901-3109 or use the contact page.