District of Columbia Securities Fraud Laws

Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw’s team of legal writers and attorneys and in accordance with our editorial standards.

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area.

Making a quick dollar on the stock market off of a tip from a trusted tipster may seem like a no- brainer. However, District of Columbia securities fraud laws make sure that stock traders and their confidants do not act fraudulently when playing the market. Among other things, these rules require brokers to be licensed and all transactions to be performed with honesty. This is a quick summary of the securities fraud laws in the District of Columbia.

District of Columbia: Fraudulent Securities-Related Acts

The District of Columbia establishes both civil and criminal penalties for violations of security fraud laws. The following table outlines the specifics of these laws.

Code Sections

District of Columbia Official Code §31-5605: Fraudulent and Other Prohibited Practices

District of Columbia Official Code §31-5606: Enforcement, Criminal, and Civil Liability
What's Prohibited?

Fraudulent Transaction:

A person shall not:

  • In connection with the offer, sale, advice, or purchase of a security employ a device or scheme to defraud by means of an untrue statement of a material fact.
  • Publish any type of article which describes the security for a consideration received from an issuer or agent without fully disclosing the receipt of the consideration and the amount of the consideration.
  • Falsify, conceal, or cover up by a trick, scheme, or device a material fact.

Manipulation of Market:

A person shall not:

  • Quote a fictitious price for a security;
  • Effect a transaction in a security which involves no change in the beneficial ownership of the security for the purpose of creating a false or misleading appearance of active trading;
  • Enter an order for the purchase or sale of a security for the purpose of creating a false or misleading appearance of active trading;
  • Employ any other deceptive or fraudulent device, scheme, or artifice to manipulate the market in a security.

Criminal Penalties

Any person who violates District of Columbia securities fraud laws is guilty of fraud in the second degree and can be fined up to $3,000 or 3 times the value of the property which was stolen (whichever is greater), imprisoned for up to 3 years, or both.

Any person who violates these laws by using one or more telephones or other electronic means of communication is guilty of fraud in the first degree and can be fined up to $5,000 or 3 times the value of the property obtained (whichever is greater), imprisoned for up to 10 years, or both.

Civil Liabilities

A buyer of security may also sue at law or in equity to recover the consideration paid for the security, or for damages if the buyer no longer owns the security.

If you have been charged with securities fraud violations and would like legal assistance, you can contact a District of Columbia securities fraud lawyer through FindLaw. Visit FindLaw's sections on securities fraud and other fraud and financial crimes for more articles and information on this topic.

Was this helpful?

Helpful Links

Popular Directory Searches