Lying to Regulators … What’s The Risk?


In one of the most high-profile cases of its time, Martha Stewart was convicted of obstructing justice as a result of her intentional misrepresentation to Securities and Exchange Commission and FBI investigators regarding the circumstances of her sale of ImClone Systems stock. While Stewart was not criminally charged with insider trading as a result of her actions, she was ultimately convicted for her participation in a scheme to cover up her actions and the actions of her broker. Stewart’s obstruction conviction resulted in five months of jail time and a five-month home confinement sentence plus a fine of $30,000. Not unexpectedly, obstruction of justice charges are not limited to such high-profile cases.

Chapter 73 of Title 18 (18 USC §1501, et seq.) of the U.S. Code provides the statutory scheme for the federal crime of obstruction of justice. Importantly, as far as financial instructions are concerned, Section 1517 provides:

Originally Published in Bank News - August 2013.

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Topics:  Brokers, False Statements, FBI, Investigations, Lying, Misleading Statements, Obstruction of Justice, SEC, State Regulators

Published In: Criminal Law Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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