Federal Securities and Commodities Fraud – 18 U.S.C. § 1348
Federal securities and commodities fraud charges under 18 U.S.C. § 1348 are among the most serious white-collar crimes prosecuted in federal court.
These cases often involve complex financial transactions, multiple defendants, and parallel investigations by federal agencies, including the SEC, DOJ, and FBI.
A conviction can result in decades in federal prison, massive financial penalties, asset forfeiture, and permanent damage to your professional reputation.
Anyone under investigation or indictment for securities or commodities fraud should retain experienced federal criminal defense counsel immediately.
What Is Federal Securities Fraud Under 18 U.S.C. § 1348?
18 U.S.C. § 1348 makes it a federal crime to defraud any person in connection with a security or commodity, or to obtain money or property through false or fraudulent pretenses, representations, or promises involving securities or commodities transactions.
The statute is modeled after federal mail fraud and wire fraud laws, but specifically targets misconduct in financial markets.
Unlike many state offenses, federal securities fraud does not require proof that the defendant actually profited—attempting or intending to defraud is sufficient.
What Is a “Security” or “Commodity”?
Securities
A security is a financial instrument purchased with the expectation of profit, including:
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Stocks and shares
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Bonds and debentures
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Notes and investment contracts
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Mutual funds and derivatives
Trading of securities in the U.S. is governed by the Securities Exchange Act of 1934, enforced by the Securities and Exchange Commission.
Commodities
A commodity is a good traded on an open market, including:
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Precious metals (gold, silver)
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Agricultural products (wheat, corn)
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Energy resources (oil, gas)
Commodities trading often involves futures and options contracts, which are also covered under § 1348.
Common Types of Federal Securities Fraud Schemes
Federal prosecutors and the SEC pursue a wide range of alleged schemes, including:
Insider Trading
Trading securities using material, non-public information giving unfair advantage over other investors.
Churning
Excessive trading by a broker to generate commissions, without regard to client interests, often requires proof of broker control over the account.
Misrepresentation
Knowingly making false statements or omissions about a security's value, risks, or performance to induce investment.
Pump-and-Dump Schemes
Artificially inflating stock prices through false hype, then selling shares at the peak, leaving investors with losses.
Accounting Fraud
Manipulating or falsifying corporate financial records to mislead investors, auditors, or regulators.
Outsider Trading
Illegally accessing confidential financial information through data breaches or hacking, then trading on that information.
Other Fraudulent Conduct
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Abusive short selling
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Lying to corporate auditors
Two Categories of Conduct Criminalized by § 1348
18 U.S.C. § 1348 criminalizes two distinct—but related—forms of misconduct:
1. Defrauding Any Person
Executing or attempting to execute a scheme to defraud in connection with securities or commodities transactions.
2. Obtaining Money by False Pretenses
Obtaining money or property through false or fraudulent representations connected to securities or commodities.
Both categories are punishable equally under federal law.
Related Federal Charges
Securities fraud cases are frequently charged alongside:
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Wire fraud (18 U.S.C. § 1343)
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Mail fraud (18 U.S.C. § 1341)
Under 18 U.S.C. § 1349, attempts and conspiracies carry the same penalties as completed fraud.
Penalties for Federal Securities Fraud
A conviction under 18 U.S.C. § 1348 carries severe penalties, including:
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Up to 25 years in federal prison
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Substantial criminal fines
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Restitution to victims
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Asset forfeiture
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Professional license revocation
Sentencing Guidelines & Loss Calculations
Federal judges rely on the U.S. Sentencing Guidelines, where the intended loss—not just actual loss—can dramatically increase sentencing exposure.
Judges have discretion, but loss calculations often drive outcomes.
Defenses to Securities and Commodities Fraud Charges
Federal securities fraud cases are highly defensible when represented early and strategically.
Common defense strategies include:
Lack of Intent
Prosecutors must prove intentional deception, not mere negligence or poor business judgment.
No Material Misrepresentation
If the alleged statements were accurate, immaterial, or not relied upon by investors, the case may fail.
No Causation of Loss
Market forces—not the defendant's conduct—may have caused investor losses.
Good-Faith Reliance
Reliance on accountants, attorneys, or auditors can negate criminal intent.
Insufficient Evidence
Complex financial cases often rely on assumptions and expert testimony that can be challenged.
Why Early Legal Representation Is Critical
Federal securities investigations often begin months or years before charges are filed. Early intervention may:
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Prevent indictment
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Limit charges
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Reduce loss calculations
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Avoid parallel SEC enforcement
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Preserve professional licenses
Once indicted, options narrow quickly.
Speak With a Federal Securities Fraud Defense Lawyer
If you are under investigation or charged with federal securities or commodities fraud, do not speak to regulators or investigators without counsel.
Hedding Law Firm represents individuals and businesses nationwide in complex federal white-collar cases.
📞 Call 866-986-2092 for a confidential consultation to protect your rights and begin building a defense strategy.