Investing is an important way for individuals and businesses to grow their wealth and fund future goals. However, not all actors in the financial industry operate ethically. Some brokers and advisers engage in dishonest or illegal practices that undermine an investor’s interests.
If you’ve experienced losses due to potential securities violations like misrepresentation, negligence, theft, or fraudulent schemes, you may be wondering about your rights as an aggrieved party. This article provides an overview of key provisions within California’s securities laws.
At Meyer Wilson, we aim to help victims of securities fraud understand the protections and recourse available under state statutes and how to pursue appropriate relief with help from a securities fraud lawyer.
Understanding Securities Fraud in California
These are some of the most common prohibited acts of securities fraud according to California law.
Securities Fraud encompasses many acts, including manipulation through misinformation, insider trading, artificially swaying prices, bypassing registration, and sellers offering biased advice due to undisclosed incentives, excess trading of accounts, and unauthorized deals.
The laws are complex, but this highly condensed list can provide you with a general idea of the laws designed to protect investors.
Misrepresentation or Omission of Key Facts
Providing false or incomplete information about important investment characteristics like risks, potential returns, financial status of companies, or other details that could impact decisions.
Market manipulation includes intentionally influencing market prices through the spread of misleading information or engagement in fake trades, wash sales, or other unlawful tactics designed to artificially control valuation.
Selling Unregistered Securities
Selling unregistered securities means offering investments that have not properly met registration requirements with state regulators intended to protect investors through disclosure of details. In certain circumstances, securities may not need to be registered depending on who is purchasing them.
In California, if it can be proven that you have an established personal relationship with the buyer or the buyer is an experienced investor, registration may not be a factor.
Churning of Customer Accounts
Churning refers to engaging in excessive and unwarranted trading activity solely to generate inflated fees and commissions rather than benefit the long-term interests and goals of the investor.
Unauthorized transactions include executing trades, investments, or other dealings involving client assets without proper approval or beyond pre-approved risk parameters and guidelines pertaining to permissible uses of funds. In other words, your advisor is buying and selling securities with your money and without your knowledge.
The goal of these laws is to protect investors from a wide range of deceptive and manipulative practices involving misinformation or abuse of authority.
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Insider trading is taking unfair advantage of non-public information obtained through special access or positions to illegally profit from trading activity in that stock or security.
For example, let’s say the CEO of a tech company just learned that quarterly earnings exceeded expectations by a large margin due to a new product launch. However, this positive earnings report won’t be released to the public for another few weeks.
If the CEO decided to purchase call options in her own company’s stock before the announcement, betting that the share price will rise substantially once investors find out about the great earnings, she would be engaging in illegal insider trading.
Even though she may profit from the trades, it is an abuse of her position of privilege, which provides non-public information not equally known by all other market participants at that time.
Non Disclosure of Conflicts of Interest
Failing to reveal compensation structures, personal incentives, or other proprietary interests that could reasonably bias or partially compromise the objectivity of any advice provided. As a way to protect investors, FINRA requires that all conflicts of interest must be fully disclosed to customers.
FINRA indicates that financial institutions that both make and sell investment products must have safeguards in place to avoid conflicts of interest that could happen if financial advisors are pressured to recommend these proprietary products, even if it’s not in the best interests of investors.
More Examples of Fraudulent Conduct
Typical scenarios that could give rise to fraud claims involve brokers touting high-risk speculative investments as low-risk, providing fabricated track records, or falsely guaranteeing profit.
Embezzlement of funds for personal use rather than the stated investment purpose is another clear violation. A securities fraud investment lawyer can review the details of your specific claim and help you understand what legal options are available.
Our lawyers are nationwide leaders in investment fraud cases.
How Can a Securities Fraud Lawyer Help Me?
Most securities fraud cases are handled not through the court system but rather through an arbitration process laid out by industry regulations. An experienced securities lawyer can still provide vital assistance:
- Evaluate the strengths and weaknesses of your potential arbitration claim. Lawyers are well-versed in what evidence typically succeeds or fails in these disputes.
- Conduct a thorough investigation of the facts to build the strongest support for your allegations within the arbitration forum’s rules and guidelines.
- Understand the nuances of the arbitration process and help you navigate required filings, timelines, discovery procedures, and other procedural aspects.
- Represent you aggressively during negotiations, where the vast majority of matters are resolved. An investment fraud lawyer leverages their knowledge to maximize the outcome.
- Offer guidance and counsel as you pursue the dispute either in arbitration or outside in court. Attorneys can ease stress and clarify intricacies every step of the way.
- In securities arbitration, experienced legal assistance is key to ensuring your matter is handled properly within the alternative process.
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We Help Investors All Over the Country With Securities Arbitration and Litigation
Our law firm is proud to represent individual investors nationally in arbitration and court cases involving securities fraud and other misconduct claims. We understand the difficulties and problems that investors have when they have lost money because of fraudulent behavior in the securities business.
Since each client’s situation is different, we always come up with a custom legal strategy. We take the time to learn about your position and your goals, and then we give you advice on the best way to move forward. However, the choice is ultimately yours to make.
Our securities fraud law firm is committed to protecting investors’ rights and assisting them in navigating the complex legal system. Let us help you make your voice heard. Contact Meyer Wilson today.
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