Microcap Fraud Defense

Posted By Max Soni, On October 19, 2020

Microcap Fraud Defense

The Spodek Law Group team of attorneys can help with Microcrap fraud defense. Our defense attorneys help clients, who have complex corporate securities issues, including microcap fraud. We can handle all stages of the Microfraud fraud investigation and litigation process. We help small, and large, corporations, and provide defense strategies to help combat unfair accusations of microcap fraud.

If you’ve been charged, or if you’re being investigated, for microcap fraud, now is the time to take action. The SEC has increased enforcement efforts and is coordinating with other agencies like the FBI. Microcap companies are at immense risk. Successful investigations can result in jail time and other penalties. You need a Microcap fraud defense lawyer who can help you. You shouldn’t wait to get in touch with an experienced defense lawyer.

Any charge against you has the power to shut down your hard work, and the company. It’s critical you do everything possible to defend your rights.

At Spodek Law Group, we are qualified in handling securities fraud cases, and microcap fraud. We are a national law firm that has defense attorneys who can help you.

What’s microcap fraud

This is a type of securities fraud which involves microcap companies. The fraud occurs on the OTC market for securities, instead of a national securities exchange. The microcap stock, is traded on two systems: Pink Sheets and OTC Bulletin Board. The microcap stock is usually a very low priced stock. It can be difficult to find microcap fraud because microcap companies don’t report financial reports with the SEC. They are subject to less regulations. Companies that are targeted with microcap fraud usually have market cap of $250 million or less.

Examples of Microcap fraud

Pump and dump: Most common example of microcap fraud. It happens when investors are told by telemarketers to buy stock, and sell before the price goes down. Once its hyped, insiders sell the stock and make a profit.

Off shore scam: Company sells their stock outside of the USA to foreign investors. They don’t need to register their stock under the Regulation S. This off-shore microcap scheme happens when a microcap company sells unregistered stock at a discount, to fraudsters – who are acting as if they are foreign investors. These investors then sell the stock to USA investors at inflated prices. They share the profits with the insiders.

It’s not uncommon for fraud involving microcap stock to involve email spam, promoters, press releases, and other forms of internet fraud.

How Microcap fraud investigations happen

It’s easy for an investor to say they were harmed by fraud in a microcap company. There are easy to follow steps on the SEC’s website that tells an investor how to contact the SEC and report a potential fraud. The SEC also lists red flags that tells investors of certain fraudulent activity.

Microcap fraud charges are usually associated with violations of securities laws such as:

  • Section 10(b) of the Securities Act of 1934.
  • Section 17(a) of the Securities Act of 1933
  • Aiding/Abetting with fraudulent activity
  • Acting as unregistered broker-dealer and failing to register
  • Failing to comply with registration provisions of the securities act
  • Conspiracy charges

How should you respond if you’re charged/arrested

A charge of microcap fraud can result in criminal penalties and jail time. The SEC might also seek disgorgement, which means the return of all ill-gotten gains, plus interest. An investigation can result in huge expenses, and could present challenges for your company. The SEC is very serious about investigating microcap fraud. Microcap companies are easy targets for federal agents.

If you’re charged, and need help defending your company, call our offices today.