Criminal Liability - Securities Exchange Act of 1934 - Explained
Criminal Liability under the 34 Act
Written by Jason Gordon
Updated at April 6th, 2023
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What is criminal liability under the 1934 Act?
The 34 Act provides for criminal sanctions for willful violations of its statutes or corresponding regulations. More specifically, it imposes liability for false, material misstatement in applications, reports, documents, and registration statements. Individuals face up to a 25-year sentence and business entities face fines of up to $25 million. Many professionals (accountants) have been found guilty for failure to disclose information. The common defense for this criminal charge is a lack of intent to deceive or defraud.
Note: Most criminal prosecutions occur under Section 10(b) or Rule 10(b)(5).
Next Article: Securities Enforcement Remedies Act Back to: SECURITIES LAW
Discussion Question
How do you feel about the possibility of criminal liability for violation of the securities laws? Should these penalties be reserved for intentional deceit? Why or why not?
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