The Securities and Exchange Commission (SEC) and other organizations set federal regulations for brokers, investment advisers, and firms in the United States. Securities laws require that these entities register with the appropriate organizations, give honest information to investors about the purchase and sale of securities, and uphold high broker-client standards. The best way to protect yourself against securities fraud is to understand the laws that brokers and their firms must abide by.
Laws that Govern the Securities Industry
Lawmakers have passed several acts over the years that have shaped the way brokerage firms and brokers must conduct business. According to these regulations, brokers and firms must deal fairly with investors, register with the SEC, and obey certain rules and regulations. Here are a few of the federal laws that firms and their brokers must follow:
- Securities Act of 1933. This act requires brokers to give financial and other significant information about securities offered for public sale. It also prohibits misrepresentation, deceit, and fraud in the sale of securities.
- Securities Exchange Act of 1934. This act created the SEC. The SEC has the power to oversee and regulate brokerage firms, ensuring they abide by the rules.
- Investment Company Act of 1940. This act minimizes conflicts of interest between companies that engage in securities trading. It requires companies to disclose their investment policies and financial status to investors on a regular basis.
- Investment Advisers Act of 1940. This act regulates investment advisers, requiring that any firm or sole financial adviser compensated for giving advice about securities investments be registered with the SEC.
These four acts describe a few of the dozens of laws that people and companies in the securities industry must follow. In addition to federal securities laws, every state enacts their own securities law. An attorney who specializes in broker misconduct will have a comprehensive list of all laws and regulations that brokers and brokerage firms must follow and can help you explore all your legal avenues. Contacting an attorney about your losses will give you a better idea of your recovery options.
Fight Back Against Regulations Violations
Too often, an individual broker or the entire firm resorts to fraud to make money off of unwitting clients. Untrustworthy financial advisors may intentionally violate federal and state regulations to earn more commission, churning a client’s account or making unauthorized investments. Unfortunately, there are myriad ways an advisor can take advantage of a client – if he or she doesn’t know what to look for. In other cases, an advisor or firm unknowingly violates regulations, failing to act in a client’s best interest. Regardless of whether the defendant may be guilty of fraud or carelessness, victims have the right to pursue retribution.
Recovery may be available to victims of advisors who violate state and federal securities laws. The U.S. justice system provides the opportunity to file an arbitration claim with the Financial Industry Regulatory Authority (FINRA). FINRA can impose fines in order to keep brokers and their firms honest, but investors looking for restitution must arbitrate those investments disputes with the brokerages firms and brokers through FINRA. For the best chances at success, investors should legal team with experience in FINRA dispute resolution. Erez Law has defended thousands of clients in these arbitration claims.
Trust Erez Law, Experienced Securities Fraud Attorneys
Jeffrey Erez, founder of Erez Law, is dedicated to serving clients who have suffered investment losses at the hands of reckless brokers and brokerage firms. With more than 2,000 FINRA arbitrations claims under his belt, Mr. Erez has the experience clients need to file a claim with FINRA.
To discuss your case in detail with one of our lead attorneys, call 888-840-1571 or contact us online. We’ll listen to your description of what happened and tell you if we believe you have a chance to recover your losses.