Illinois Securities Fraud Lawyer
Illinois investment fraud attorneys represent investors who suffered losses due to broker fraud or misconduct. These types of cases are common in the securities industry. Investors may be surprised to learn that they cannot simply sue their broker or brokerage firm in civil court. Most investment contracts come with pre-dispute arbitration clauses that require signees to use FINRA arbitration to resolve disputes and receive settlements.
If you are not sure of what steps to take to file for FINRA arbitration, speak with an investment loss attorney. Illinois has a FINRA arbitration hearing location in Chicago. In certain cases, the hearing may take place over Zoom.
What Types of Cases Do Illinois Investment Fraud Attorneys Handle?
Illinois securities attorneys take on cases where registered representatives of brokerage firms – like stock brokers – have engaged in fraud or misconduct.
The following are common examples of common securities rule violations:
Unsuitable Investment Recommendations. FINRA brokers must take into account basic facts about their investors, including their age, tax status, liquidity needs, financial goals, and risk tolerance. If an investor only wants conservative investments, they should not be placed in high-risk securities where they could lose their principal investment.
Investors who want to live off their investment portfolios during retirement should avoid risky investment products like private placements, alternative investments, and promissory notes. These investments do not have to register with the Securities and Exchange Commission and therefore have less publicly available information about their leadership and business strategies.
Misrepresentation and Omission: Investors are required to provide all material information that might affect an investor’s decision to buy a security. For example, brokers must not omit information about fees associated with redeeming a security before its maturity date. Tax implications, potential for losses, and any associated fees should be disclosed.
Excessive Fees, a.k.a. “Churning”: This type of fraud involves brokers executing securities transactions purely for the sake of commissions. Securities transactions come with fees, so the number of transactions should not be so large that the fees make it impossible for the portfolio to generate a return for the investor.
Common investment scams, like pyramid schemes and Ponzi schemes, often masquerade as hot ticket investments that can provide investors with extraordinary returns.
REITs are illiquid investments that may tempt investors who wish to participate in the real estate market. REIT investors must be prepared to hold their investments for a prolonged period of time. Non-traded REITs are even riskier – non-traded means they cannot be bought and sold on the public exchange.
Brokers are only allowed to sell investments with their brokerage firm’s oversight. They must only recommend investments from their brokerage firm’s list of approved securities, or they must secure permission to sell an investment outside of their firm. Selling away often occurs in cases where the broker wishes to secure an especially high commission by recommending a risky security.
Illinois Securities Fraud: Laws and Enforcement Actions
Blue Sky laws are state securities laws that provide another layer of protection against securities fraud. States usually base their securities fraud laws on the framework provided by federal regulators. Illinois investment fraud lawyers are experts on state securities regulations.
- The Illinois Securities Law of 1953 defines securities and stipulates that investment advisers and brokers must be registered with the state.
- The Act describes the process by which an issuer must register securities.
- Illinois also defines a mineral investment contract, which is a distinct type of security.
- The Illinois Securities Act also established the Securities Investors Education Fund, a special fund used to promote public awareness of the dangers of securities fraud.
- Illinois requires brokers to register as business brokers with the Illinois Securities of State Securities Department.
The Illinois Enforcement Complaint Center
The Illinois Enforcement Complaint Center may bring regulatory action in cases of securities fraud. Illinois provides a securities complaint contact form for investors to report any losses they believe may be due to securities fraud. Investors can also check their investment professional’s registration and history with the Securities Department: 1-800-628-7937.
The securities department advises, however, that they cannot order the return of investment losses and advises investors to consult with an Illinois securities fraud lawyer if they wish to pursue a case.
Audit and Compliance Division
According to the Illinois EEC website, the Audit and Compliance Division conducts routine and unannounced exams of registered and unregistered entities that sell securities, provide investment advice, sell business opportunities, and act as business or loan brokers. These audits are designed to catch securities fraud before they cause financial harm to investors. In many cases, however, by the time the State brings an enforcement action, the damage has already been done. An Illinois securities fraud attorney can help hold the offending brokerage firm responsible.
Illinois Security Enforcement Actions
Illinois regularly revokes broker registrations and suspends broker licenses. For instance, Illinois revoked broker Ronald Molo’s license in October 2021 before the SEC barred him the following month. Illinois alleged that Ronald Molo had solicited investors for fictitious investments and subsequently misappropriated their funds.
You can see the complete list of Illinois’ recent enforcement actions here.
What Can I Do to Avoid Securities Fraud?
Investors should avoid unregistered investments and unregistered brokers. Always ask a broker or investment adviser for their CRD number and look it up on BrokerCheck.org. Investment professionals must register with either the SEC or FINRA (learn about the differences between brokers and investment advisers here). If an individual has not registered with the proper authorities, they may be engaged in securities fraud.
Hiring an Illinois Investment Fraud Lawyer
If you believe you suffered losses due to broker fraud or misconduct, speak to an investment attorney. Illinois State securities fraud enforcement cannot offer perfect protection to investors. Investors who stand up for themselves and file for FINRA arbitration may be able to recover their losses and discourage their brokerage firm from future violations of securities laws.
Contact our firm to speak with an Illinois securities fraud lawyer. Call (877) 600-0098 or email info@kurtalawfirm.com.