Securities Fraud Prosecution in Georgia

Securities fraud in Georgia is prosecuted under a comprehensive state statutory framework that operates alongside, but separately from, federal securities enforcement. This framework governs how the state defines fraudulent conduct in securities transactions, how criminal violations are penalized, and how civil and administrative remedies function in parallel with criminal prosecution.

The Governing Statute

Securities fraud prosecution in Georgia is governed by the Georgia Uniform Securities Act of 2008, codified at O.C.G.A. § 10-5-1 et seq. This Act replaced the prior Georgia Securities Act, modernizing the state’s securities regulatory framework and aligning it with the federal Uniform Securities Act model used as a template across many states. The 2008 Act consolidated and updated the rules governing the offer, sale, and purchase of securities within Georgia, along with the regulation of those who sell securities or provide investment advice for compensation.

The Fraud Prohibition Under § 10-5-51

The core prohibition against securities fraud is found in O.C.G.A. § 10-5-51. This statute makes it unlawful for any person, in connection with the offer, sale, or purchase of a security, to engage in any of three categories of prohibited conduct: employing a device, scheme, or artifice to defraud; making an untrue statement of a material fact or omitting a material fact necessary to make statements made not misleading; or engaging in any act, practice, or course of business that operates as a fraud or deceit upon another person.

These same fraud prohibitions extend to investment advisers who are compensated for advising others regarding securities. The statute does not limit its reach to formal sales transactions alone; it applies broadly to conduct connected with securities transactions and to advisory relationships involving compensation.

Criminal Penalties Under § 10-5-57

O.C.G.A. § 10-5-57 establishes the criminal penalty structure for violations of the Act. A willful violation of the Act, or of a rule or order issued under it, constitutes a felony. The statute provides for imprisonment of up to five years, a fine of up to $500,000, or both, for each count of conviction. Because penalties attach on a per-count basis, the cumulative exposure in a securities fraud prosecution can scale with the number of distinct violations charged.

The willfulness requirement is a defining feature of the criminal provisions, distinguishing conduct that rises to the level of criminal liability from conduct that may instead be addressed through civil or administrative channels.

Civil Remedies

Beyond criminal prosecution, the Georgia Uniform Securities Act establishes civil remedies under O.C.G.A. §§ 10-5-55 through 10-5-58. These provisions give investors rescission rights, allowing certain securities transactions to be unwound where a violation of the Act has occurred. The Act also establishes civil liability for sellers who violate its provisions. The Georgia Commissioner of Securities has authority to enforce these civil provisions, operating independently of any parallel criminal case that may arise from the same underlying conduct.

Administrative Sanctions

The Commissioner of Securities, acting under authority granted in O.C.G.A. § 10-5-70 et seq., has separate administrative enforcement powers. These include the authority to issue cease-and-desist orders, to deny or revoke securities registrations, and to impose civil penalties of up to $5,000 per violation. These administrative powers operate independently of criminal prosecution, meaning that conduct addressed through an administrative sanction may also be the subject of a separate criminal case, and vice versa.

How State Prosecution Relates to Federal Enforcement

Securities fraud conduct in Georgia can also intersect with federal securities enforcement carried out by the United States Securities and Exchange Commission. State prosecution under the Georgia Uniform Securities Act operates as a distinct track from federal SEC enforcement, with its own statutory basis, its own penalty structure, and its own enforcing authority in the Georgia Commissioner of Securities. The two systems can operate in parallel regarding the same underlying conduct, though the federal enforcement process involves its own separate procedures.

Conduct that constitutes securities fraud can sometimes overlap with other criminal statutes, such as those addressing computer crime used to facilitate fraud, racketeering charges built on securities fraud predicates, theft by deception, or identity fraud. These are governed by separate statutes with their own elements and are not part of the Georgia Uniform Securities Act framework described here.

This article provides general information about Georgia law and is not legal advice. Consult a licensed Georgia attorney about a specific situation.