15 U.S.C. 78ff provides criminal penalties for specified willful Securities Exchange Act violations and certain knowing false statements in required filings. It does not make every securities-law error a crime. The particular duty, mental state, and charged subsection must be identified. [1]
Read the penalty provision carefully
The principal subsection authorizes up to 20 years’ imprisonment and specified fines, including different limits for individuals and other persons. It also contains a protection against imprisonment for violating a rule or regulation when the person proves lack of knowledge of that rule or regulation. That is not a blanket defense to every securities charge. [1]
Civil proceedings are separate
SEC v. Jarkesy held that the Seventh Amendment entitles a defendant to a jury when the SEC seeks civil penalties for securities fraud in the circumstances addressed by the Court. It did not repeal section 78ff or convert criminal prosecutions into agency proceedings. [2]
Review the actual theory
Identify the allegedly false filing or prohibited transaction, who had responsibility, what was known, and what instructions or warnings existed. Preserve drafts, communications, compliance advice, and transaction records. A material falsehood and an immaterial clerical mistake require different analysis.
Separate knowledge of a rule from knowledge of the conduct
The statutory protection concerning imprisonment for an unknown rule is not the same as claiming the person did not know a transaction occurred or a filing was false. Identify the prohibited act, applicable rule or statute, alleged willfulness, and the precise protection being invoked. It should not be casually described as immunity from fines or all prosecution. Civil fraud enforcement, criminal securities charges, and a private investor lawsuit also have different procedural and substantive requirements. A company should preserve compliance instructions and the information available when the decision was made; a later unfavorable outcome alone does not establish what an individual knew at the time. [1] [2]
See free writing prospectus rules and broker-dealer registration for substantive securities requirements that can arise alongside enforcement. The existence of a reporting violation alone does not establish every criminal element.
Primary sources
Sources checked: October 31, 2026.