In 2025, there were 202 cases of securities and investment fraud under the federal sentencing system. Out of a total of 66,662 federal felony and Class A misdemeanor cases, this category of crime showed a 43 percent increase from 2021.
In 2025, the SEC charged 456 securities violations involving conduct that includes market manipulation, offering fraud, issuer disclosure violations, and insider trading. The SEC also reported nearly 54,000 tips, complaints, and referrals.
For North Carolina residents who are accused of this kind of crime, a Statesville criminal defense lawyer can be important to determining whether the charges actually fit the alleged conduct.
Let’s take a closer look at criminal liability for securities violations and the conduct that can lead to criminal charges.
The Line Between Civil and Criminal Is Willfulness
Federal securities law creates two parallel enforcement paths that can run at the same time against the same person for the same underlying conduct.
The SEC pursues civil enforcement, which covers negligent and reckless violations. This action can result in monetary penalties, disgorgement of profits, and industry bans, none of which involve prison time.
Unlike enforcement actions brought directly by the SEC, criminal prosecutions that are managed by the Department of Justice need to look at the aspect of willfulness. In accordance with 15 U.S.C. § 78ff, criminal penalties are imposed on willful violations only, i.e., it needs to be proven that there was an intentional violation of known legal obligations.
This distinction explains how the same facts may support an SEC civil suit against one individual and, in relation to the other individual involved in the same scheme, a criminal indictment.
When the SEC’s investigators believe the evidence shows willfulness rather than negligence, they refer the matter to DOJ. These two proceedings move forward simultaneously, with testimony and documents from the civil side sometimes being made available to criminal prosecutors.
What Willful Conduct Actually Looks Like in Practice
Willful intent is not openly declared, so the prosecution proves it by way of circumstantial evidence. Potential evidence may include trading activity that matches up too conveniently with insider knowledge before it becomes public, hiding trading activity through intermediaries and nominee accounts, and providing contradictory explanations for the activity when questioned. Tampered records can also constitute evidence that the offense was done in willful conduct.
These facts do not prove intent by themselves, but when combined they form a pattern from which a jury may draw an inference of intent. These cases can be serious, even when each individual fact may seem harmless on its own.
What’s at Stake Once a Case Turns Criminal
The penalties attached to criminal securities violations are substantial. A person who is found guilty of violating 15 U.S.C. § 78ff can be imprisoned for as long as 20 years. Individuals can also be fined up to $5 million, and entities can be fined up to $25 million.
Several statutes, including the Sarbanes-Oxley Act, can put a person at potential risk of more prison time depending on the fact pattern of the individual case.
Attempts and conspiracies to commit securities fraud carry the same criminal exposure as a completed offense. This exposure means the government doesn’t need to prove the scheme actually succeeded, only that the defendant knowingly participated in it.
The legal landscape is where institutional and individual exposure often diverge. A FINRA and SEC lawyer for financial institutions typically spends most of their time on the civil and regulatory aspects of this work. They work with the formation of RIAs, compliance advice, and securities firm defense in SEC and FINRA investigations many times before a matter escalates to a criminal referral.
That regulatory defense work matters since it’s often the earliest opportunity to shape how a case gets characterized. A lawyer’s assistance is important before investigators conclude whether the conduct at issue reflects willfulness or something less.
Why the Distinction Shapes Everything About a Defense
None of these factors means every SEC investigation is quietly building toward criminal charges, and the overwhelming majority resolve civilly without DOJ ever getting involved. But understanding which track a matter is actually on, or could become, changes what a defense needs to accomplish.
A civil defense aims to limit financial exposure and industry consequences. Meanwhile, a proceeding for criminal defense focuses on whether the conduct was willful. The willfulness aspect is a key distinction between a regulatory penalty and a federal conviction.
Recognizing early which fight is actually underway is often the difference between a defense strategy that addresses the real risk and one that’s still responding to yesterday’s version of the case.