What Counts as Securities Fraud Under Indiana and Federal Law?

Securities fraud under Indiana and federal law generally involves knowingly lying about important facts, or leaving out facts that make a statement misleading, in connection with buying or selling an investment, whether that’s stock, a bond, or, in some cases, a promissory note.

Being contacted by the FBI, the SEC, or the Indiana Secretary of State’s office does not mean you are guilty.

How Indiana and Federal Law Define Securities Fraud

Indiana law makes it unlawful, in connection with offering, selling, or buying a security, to use a “device, scheme, or artifice to defraud,” misstate a material fact, or run a course of business that operates as a fraud on the other party.

Federal law covers nearly the same ground. Rule 10b-5 bars any scheme to defraud, or untrue statement of a material fact, in connection with buying or selling a security.

Most fraud claims under both laws depend on materiality. A fact is material if a reasonable investor would likely see it as important to an investment decision.

Penalties for Securities Fraud in Indiana and Federal Court

• A knowing violation of Indiana’s securities law is a Level 5 felony, which can mean one to six years in prison and a fine of up to $10,000. It becomes a Level 4 felony if the person harmed is 60 or older, or if the violation uses, or is tied to, a relationship based on religious affiliation or worship.
• A willful violation of Section 10(b) and Rule 10b-5 can bring up to 20 years in prison and a fine of up to $5 million for a person, or $25 million for a company. These are maximums. The judge sets the actual sentence.
• Prosecutors can also charge securities fraud under 18 U.S.C. § 1348, which carries up to 25 years in prison. That law covers public-company securities and commodities, not every private deal, so other federal fraud laws may apply instead.

Because state and federal approaches differ this much, the right defense strategy adapts to whichever court, and agency, actually filed the case.

Frequently Asked Questions

Can Indiana and federal prosecutors both charge the same conduct?

Often, yes. Indiana and federal law overlap, so one scheme can lead to both a state felony charge and a federal indictment. The Indiana Securities Division, the FBI, and the U.S. Attorney’s Offices for the Northern and Southern Districts of Indiana can work the same case together. But Indiana law can bar a state case after a federal conviction or acquittal for the same conduct, so the order of charges can matter.

What usually triggers an SEC investigation in Indiana?

Many investigations start with an investor complaint, a broker-dealer’s compliance report, or a tip a state regulator passes to federal agencies. The Indiana Securities Division assists prosecutors with criminal investigation of securities-related violations through its Prosecution Assistance Unit. A records request from either agency is a sign to get legal advice quickly.

What should I do if an investigator contacts me about a securities transaction?

If an investigator from the SEC, FBI, or Indiana Securities Division reaches out, you may want to wait to answer questions or hand over documents until you have spoken with a criminal defense attorney. Anything you say can be used in civil or criminal proceedings. If you received a subpoena or court order, there may be a deadline to respond, and a lawyer can help you meet it.

The Criminal Defense Team: Your Indiana Securities Fraud Defense Law Firm

Learning that an agency is looking into your trades, fund, or advisory business is unsettling, and these cases often move on a state track and a federal track at once. The first interviews can shape how the rest of the case goes.

If the SEC, the FBI, or Indiana’s Securities Division has already reached out, talk with someone before you answer their next question. Contact our firm today.