What is Securities Fraud in Texas?
If you’ve been following the news, you’ve probably seen the words “securities fraud” attached to high-profile scandals and big financial losses. But this crime isn’t limited to Wall Street or billion-dollar companies. It’s prosecuted right here in Texas, and it affects ordinary people every day. From investors losing their savings to professionals facing criminal charges, securities fraud is a legal issue with life-changing consequences.
Whether you’re worried about an investment that doesn’t seem right or you’ve been accused of wrongdoing, understanding what securities fraud really means under Texas law is the first step to protecting yourself.
Securities Fraud Definition
At its core, securities fraud happens when someone lies, cheats, or hides the truth while trying to get others to invest money. It usually involves stocks, bonds, or other investments, and the fraud can happen at any stage—during the offer, the sale, or even after someone’s invested.
Common Types of Securities Fraud:
- False promises of guaranteed returns
- Omitting key facts about risks or finances
- Fake or nonexistent investments
- Insider trading, where someone uses confidential information to profit
- Pump-and-dump schemes, where stock prices are artificially inflated, then sold off
- Ponzi schemes, where returns to old investors come from new investors’ money
These schemes are often designed to seem legitimate until they collapse.
Texas Laws That Govern Securities Fraud
The main state law covering securities fraud is the Texas Securities Act (Tex. Rev. Civ. Stat. Ann. art. 581-1). It prohibits:
- Misrepresenting or omitting material facts in connection with the sale of securities
- Engaging in fraudulent practices in investment deals
- Acting as an unregistered broker or dealer
You can be charged even if no one lost money; the intent to deceive is enough to violate the law.
Is Securities Fraud a Federal or State Crime?
Securities fraud can fall under federal law, state law, or both. In Texas, it’s enforced by both the Texas State Securities Board (TSSB) and federal agencies like the Securities and Exchange Commission (SEC) and the FBI.
That means a person could face criminal charges, civil penalties, or both in both state and federal court.
Penalties for Securities Fraud in Texas
The consequences for securities fraud vary based on how much money was involved and whether the fraud was part of a larger scheme.
| Amount Involved | Charge | Prison Time | Fine |
| Less than $10,000 | Third-degree felony | 2 to 10 years | Up to $10,000 |
| $10,000 to $100,000 | Second-degree felony | 2 to 20 years | Up to $10,000 |
| Over $100,000 | First-degree felony | 5 to 99 years | Up to $10,000 |
Federal Penalties for Securities Fraud
At the federal level, sentences can be much harsher; 20 years or more in prison is common for large-scale fraud. Federal courts can also impose millions in fines and restitution.
Who Investigates Securities Fraud in Texas?
Several agencies may be involved in investigating securities fraud:
- Texas State Securities Board (TSSB)
- Office of the Texas Attorney General
- U.S. Securities and Exchange Commission (SEC)
- Federal Bureau of Investigation (FBI)
- U.S. Department of Justice (DOJ)
Investigators often work together, especially if the fraud involves cross-border transactions or large sums of money.
Possible Defenses Against Securities Fraud Charges
If you’re accused of securities fraud, you still have rights and defenses.
- Lack of intent: You didn’t intend to mislead or defraud.
- Truthful statements: What you said was accurate and based on facts.
- No material omission: The information withheld wasn’t critical to the investment decision.
- Entrapment or bad investigation: Authorities acted improperly or violated your rights
Every case is different. A qualified criminal defense lawyer can assess the evidence and build a strategy around your specific situation.
Arrested? Don’t Plea, Call Me!
Securities fraud charges can turn your life upside down fast. The penalties are steep, the investigations aggressive, and even a simple mistake can be twisted into a criminal offense. Whether you’re under investigation or have already been arrested, your next move matters.
At Texas Criminal Defense Group, we understand how complex these cases are and how much is at stake. Our fraud defense attorney is ready to dig deep, protect your rights, and build a strong defense strategy tailored to your situation.