Self-dealing can lead to fraud charges for financial professionals

| May 29, 2021 | White Collar Crimes |

Many jobs that involve a position of trust also require a certain standard of care or obligation to others. If you manage retirement benefits for a business or financial investments for individuals, your position requires that you fulfill your fiduciary duty to your clients or customers.

Fiduciary duty is a very high standard of legal obligation to another party. Not only do you need to do what is right, but you need to put their interests above your own. Every piece of advice and investment decision should reflect the needs of your clients.

One of the quickest ways to violate your fiduciary duty to others as a financial professional is to engage in self-dealing. Doing so could not only violate the trust of the clients but also run afoul of financial laws.

What scenarios constitute self-dealing?

Self-dealing occurs in any financial transactions that you conduct using your authority or knowledge as a fiduciary to someone else for your own benefit. For example, if you know that clients who run a business are about to announce restructuring and bankruptcy, you might make investment moves based on that information. That decision could affect market trends and cause additional harm to the company.

Alternately, if you manage trust assets for a financial client, you might sell that asset to yourself, someone you know or a business that you own for less than the fair market value that it could potentially command. You may then buy it from the third party or resell it to others for a profit.

If people who trust you professionally or law enforcement investigators discover signs of self-dealing, you could find yourself facing civil lawsuits and even white collar criminal charges. It’s wise to seek guidance from an experienced attorney as soon as possible.

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