In the legal world, a violation occurs when someone’s actions or omissions breach established laws or regulations set forth by various regulatory bodies.

Within the financial sector, a violation can occur if someone trades securities in a way that disregards the legal framework established by the Securities Exchange Act (SEC Act). The SEC Act outlines specific rules governing how securities can be bought and sold to protect investors and ensure fair market practices. Any activity that falls outside these regulations, such as unregistered trading of securities or market manipulation, could be considered a violation.

Other regulatory bodies like the Commodity Futures Trading Commission (CFTC) oversee specific financial instruments like derivatives and futures contracts. Failing to comply with the CFTC’s regulations on margin requirements or reporting trades could also be considered violations. Similarly, the Internal Revenue Service (IRS) establishes tax codes and regulations. Not paying taxes you owe, filing fraudulent tax returns, or failing to report income could all be considered violations of the tax code.

The consequences of a violation can vary depending on the severity of the offense and the specific regulatory body involved. Penalties could range from fines and civil sanctions to criminal charges and imprisonment in extreme cases.