When brokers engage in misconduct, investors need a New Hampshire investment fraud attorney to seek recovery. However, most firms require investors to settle their disputes through FINRA arbitration rather than civil court. Kurta Law securities attorneys are experts in New Hampshire securities laws and the arbitration process.
New Hampshire Securities Regulation
Securities transactions in New Hampshire are regulated by the Bureau of Securities Regulation, overseen by the New Hampshire Secretary of State. They protect investors against fraud by investigating potential scams and providing education through Invest Smart NH.
New Hampshire State Securities Fraud Laws
States regulate the securities industry by passing their own laws prohibiting fraud and other types of misconduct. Known as blue sky laws, these state regulations add another layer of protection for investors.
The New Hampshire Revised Statutes (RSA) Chapter 421-B is the New Hampshire Uniform Securities Act. It describes the registration requirements for securities offerings, brokers, and brokerage firms, and defines how misconduct is penalized.
Section 421-B:5-501 prohibits brokers from employing “a device, scheme, or artifice to defraud” or engaging in “an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.”
This borrows from the language of Rule 10b-5 of Section 10(b) of the Securities Exchange Act of 1934, a federal anti-fraud regulation.
Notably, Section 421-B:5-511 of the New Hampshire Uniform Securities Act makes issuers and sellers of cryptocurrency subject to the fraud provisions of the Act.
New Hampshire Laws Against Elder Abuse
The New Hampshire Uniform Securities Act also has special protections for the elderly: Section 421-B:5-507-A prohibits the financial exploitation of the elderly and other vulnerable adults.
In particular, it prohibits brokers from misappropriating or otherwise taking control of vulnerable clients’ assets, including through deception or intimidation.
The New Hampshire Department of Justice also maintains an Elder Abuse and Financial Exploitation Unit that investigates cases of exploitation of elderly clients by their brokers.
Penalties for Securities Fraud Violations
According to Section 421-B:6-603 of the Uniform Securities Act, the state’s attorney general or Secretary of State can impose up to $5,000 in civil penalties for individual violations if they pursue civil action.
For administrative actions, Section 421-B:6-604, the New Hampshire Secretary of State can impose civil penalties of up to $2,500 for each violation. Brokers may also have their licenses suspended or revoked, and can be denied registration or barred from it entirely.
In either type of action, a firm or broker may be ordered to pay restitution or disgorgement to the investors they defrauded.
Most often, though, investors agree to seek arbitration to settle disputes when they sign their investment contracts. A securities lawyer has the expertise to navigate this process and achieve a fair settlement.
What Types of Cases Do NH Securities Fraud Lawyers Handle?
New Hampshire securities fraud lawyers take on cases involving a variety of misconduct, including fraudulent schemes like the pump-and-dump schemes common in cryptocurrency offerings.
Here are some common examples of misconduct prohibited by the New Hampshire Uniform Securities Act and FINRA rules:
- Misrepresentations or omissions: If a broker makes false statements or omits material facts related to an investment, this is a violation of FINRA Rule 2020. Material facts can include an investment’s fees, risks, or potential returns.
- Unsuitable investment recommendations: When a broker or firm recommends an investment, they must have a reasonable basis to believe that it is suitable for the investor’s financial goals. This, along with excessive trading, violates FINRA Rule 2111.
- Excessive trading: Also called churning, RSA 421-B:5-501 describes this as trading that is “beyond [a] customer’s known financial resources.” Excessive trading generates fees and commissions that reduce an investor’s profits.
- Unauthorized trading: Trading without a client’s knowledge or written authorization violates FINRA Rule 3260. An account must also be approved for discretionary trading by the firm before the broker can trade freely.
Securities Law Enforcement in New Hampshire
The New Hampshire Bureau of Securities lists recent enforcement actions on its website. These actions often cross state lines, and yield settlements or restitution for investors in multiple states.
For example, in 2023, New Hampshire participated in a multistate action that resulted in Raymond James & Associates and Raymond James Financial Services consenting to provide more than $8 million in restitution to investors. The states involved alleged that these firms charged unreasonable commissions on low-principal equity transactions.
New Hampshire securities fraud lawyers also regularly take action against individual brokers and investment advisers.
In 2024, New Hampshire alleged that registered investment adviser Thomas Chadwick invested client funds in Credit Suisse X-Links Monthly Pay 2xLeveraged Mortgage REIT Exchange Traded Notes (“REML”).
This investment was a structured product, an investment that combines the features of a bond and a derivative. The value of the investment depends on the performance of the derivative’s underlying asset, like a stock or an equity index. Structured products are too complex and high-risk for most investors.
In this case, REML was linked to the performance of the FTSE NAREIT All Mortgage Capped Index, a real estate investment trust (REIT) that issued mortgage loans to real estate owners.
New Hampshire alleged that Thomas Chadwick failed to understand the risks involved in REML and presented it as stable with low-to-moderate risk. Thomas Chadwick consented to a permanent bar from securities licensure by New Hampshire and to provide restitution of more than $4.8 million to investors.
Why Do I Need a New Hampshire Securities Fraud Lawyer?
Enforcement actions initiated by the state don’t always result in settlements for investors. A New Hampshire securities fraud lawyer can help you determine if you have a case and guide you through the FINRA arbitration process.
Kurta Law is a national law firm with headquarters in New York City. Our experienced securities attorneys regularly secure settlements for New Hampshire residents.
If you have questions before proceeding with your case, contact us for a free case evaluation at (877) 600-0098 or info@kurtalawfirm.com.