As an investor, you likely have a reasonable expectation that a company’s best interest aligns with your best interest because you both want to make money. But unfortunately, company insiders sometimes misappropriate funds and securities from investors and sometimes outright steal from investors and clients.
Theft occurs when someone takes something away from another person without the authority to do so. In contrast, misappropriation occurs when someone is in possession of another person’s property and uses it for their benefit. For example, if you give an investment broker your money to invest for you and they take the funds and use it to go on vacation, that is misappropriation of funds.
State and federal laws may apply if someone has stolen or misappropriated your funds or securities. Contact an experienced federal theft attorney at Cofer Luster to discuss your legal options. You can reach us for a confidential consultation by calling 682-777-3336 or filling out our online form.
Misappropriation is like theft because someone uses your funds or securities for their benefit. The main difference between theft and misappropriation is in who possesses the funds or securities when they are stolen. If someone is legally in possession of something that belongs to someone else and uses it in a manner that was not intended, it will be considered misappropriation.
Misappropriation Of Funds
Misappropriation of funds occurs when someone deliberately uses another person’s money in a manner that is not authorized. For example, if you give someone your money to invest in a certain stock and they use it to invest in a lower-level stock with more risk, this could be considered misappropriation of funds because they used the funds in a manner that you did not authorize.
Misappropriation of funds is easily confused with embezzlement because it occurs when a person has a relationship of trust or owes a fiduciary duty to another person, and they use that relationship to steal money for their own personal gain.
The misappropriation theory, as it relates to security fraud, means that when someone uses insider information to trade securities, regardless of if they are an “insider” or not, they may be guilty of securities fraud under this theory. An insider is generally defined as a director, official, or company employee with access to nonpublic, confidential information.
Under the misappropriation theory, even if someone is not a true insider, they can be found guilty of insider trading if they use nonpublic information to trade securities. The misappropriation theory aims to protect markets from being abused by those who gain access to confidential information regardless of their status within a company.
Investors may want to be careful when taking advice and tips from people who are employed by companies that they are giving tips on. Opinions generally are not considered insider trading; however, if the opinion is based on nonpublic information, that could be considered insider trading.
Theft, similar to misappropriation, occurs when someone takes another person’s money or assets without authorization and uses them for their benefit.
Theft of funds can occur in various ways, including outright stealing from another person. Or it can be done by stealing money or property that belongs to the government. It is a federal offense to steal funds or property from the government or a tribal organization.
Penalties For Misappropriation And Theft Of Funds Or Securities
The penalties for misappropriation and theft of funds or securities vary greatly and may depend on who misappropriated the funds, how much was taken, and whom they were taken from.
Government Property Or Funds
- Misdemeanor: If the misappropriated funds are under $1,000, it will likely be considered a misdemeanor offense, resulting in up to one year in prison and a fine of up to $1,000.
- Felony: If the misappropriated funds were more than $1,000, the offense would be considered a felony. A felony for misappropriation of funds can result in up to ten years in prison and a fine of up to $10,000.
Tribal Funds Or Property
If the funds were taken from a tribal organization, the guilty party might face up to five years in prison.
A bank official who misappropriates funds may face up to 25 years in prison.
If anyone is found guilty of securities fraud, federal law provides that they may be punished by up to 25 years in prison and a hefty fine.
Contact An Experienced Misappropriation Attorney At Cofer Luster Today
At Cofer Luster, we understand that being accused of misappropriating funds or securities can be highly stressful. Having a skilled and knowledgeable attorney on your team fighting for your best interests will increase your odds of the charge having as little of an effect on your life as possible. The federal theft lawyers of Cofer Luster are ready to use their knowledge and experience to develop a vigorous defense. Contact us today for a confidential consultation by calling 682-777-3336 or filling out our online form.