Maryland securities fraud lawyers can help investors recover losses following broker fraud or misconduct. Investors lose millions to fraud every year – often without realizing that they are victims of securities fraud. Our attorneys advise clients to regularly review their account statements and to contact a securities attorney right away if they encounter any red flags of unscrupulous trading. Kurta Law attorneys are experts in this niche area of law and can help investors navigate the complexities of securities fraud cases.
Maryland Securities Regulation
The Maryland Securities Division is the state regulator for brokerage firms and stock brokers. It can also serve as a resource for investors who have questions about their investment professionals.
- You can report suspected violations of securities rules and regulations to the Maryland Securities Division by calling (410) 576-6360.
- Maryland investors can also call the Securities Division for help checking their broker’s record for allegations of misconduct.
- Maryland’s Securities Act requires any individual or brokerage firm who hopes to sell securities to register with the Division.
Maryland Blue Sky Laws
States have their own securities laws that supplement federal securities laws. These are called “Blue Sky Laws.” The Maryland Securities Act covers the registration and sale of securities.
Under the Annotated Code of Maryland, “[a] person who engages in the business of effecting transactions in securities for the account of others or for the person’s own account or who acts as a broker-dealer or agent may not engage in dishonest or unethical practices in the securities or investment advisory business.”
This Act is broadly applicable to securities fraud cases. Securities attorneys can review the details of your stock fraud allegations to determine what other securities regulations and laws might apply to your case.
Common Regulatory Violations
Maryland state securities regulations and federal securities laws are unfortunately not enough to discourage securities rule violations by unscrupulous, fraudulent brokers.
Regulation Best Interest
Reg BI builds on the requirements of FINRA Rule 2111, which requires brokers to factor in investor characteristics when making a recommendation. These characteristics include financial goals and how much risk the investor is willing to take on. Investment recommendations may also be unsuitable if they do not factor in the investor’s age, liquidity needs (i.e., how quickly they may need to withdraw money), as well as the other types of investments in their portfolio.
Allegations of unsuitable investment recommendations and violations of securities regulations frequently involve high-risk products such as non-traded Real Estate Investment Trusts (REITs), non-traditional Exchange Traded Funds (NT-ETFs), variable insurance products, alternative investments, and private placements.
Suitability and Regulation Best Interest also apply to investment strategies. A failure to diversify also violates these rules – brokers should create a balanced portfolio that includes a variety of stocks and other asset classes.
Negligence
Broker fraud may amount to a simple matter of negligence. Failure to understand a product and a failure to perform due diligence on a riskier investment product may result in allegations of negligence.
High Standards of Commercial Honor
“High standards of commercial honor” is a broadly applicable rule. Failure to follow investor instructions, as well as other violations of securities and rules and regulations, would count as violations of this rule.
Mutual Fund Fraud
Investors should know that if they buy new shares of a mutual fund they may be entitled to a discount if they have previously purchased shares from that same fund. These are called breakpoint discounts and failing to apply them is a violation of FINRA rules.
Misrepresentation and Omission of Material Facts
FINRA Rule 2020 prohibits brokers from misleading brokers, including misrepresentations made by omitting certain material facts. Material facts include information concerning the investor’s age, risk tolerance, financial goals, tax status, as well as other investments in their portfolio.
Pyramid Schemes
Maryland Criminal Law also prohibits pyramid schemes. Pyramid schemes make money by paying participants to recruit new participants, rather than providing an actual product. Maryland Criminal Code § 8-404 states that a person who establishes, operates, advertises, or promotes a pyramid scheme could be subject to imprisonment and a fine not to exceed $10,000.
Why Do I Need a Maryland Securities Attorney?
FINRA typically requires investors to go through FINRA arbitration rather than suing in civil court. Many investors do not realize until they have a complaint that they have signed a pre-dispute arbitration clause. This clause requires investors to resolve disputes with their brokerage firm using a platform provided by FINRA.
Kurta Law Can Help
Kurta Law attorneys are experts in Maryland securities laws. Our investment fraud lawyers offer free case evaluations. We are headquartered in New York, New York, but we practice nationwide. FINRA arbitration hearings can take place at the hearing location in Baltimore, or via video conference. Kurta Law attorneys will push to settle your case as quickly as possible. Contact us today to discuss the details of your case: Call (877) 600-0098 or email info@kurtalawfirm.com.