Michigan securities fraud lawyers can help investors who have suffered losses after a broker engaged in some form of misconduct – perhaps they recommended an overly risky investment, misrepresented important facts like fees or capital gains, or engaged in outright fraud or theft. Kurta Law securities fraud lawyers are experts in Michigan securities laws and may be able to help you settle your case quickly and fairly.
Can a Michigan Investment Fraud Lawyer Help Me Recover Financially?
If you worked with a FINRA-registered broker, you may have a case for a securities fraud lawyer. Michigan requires brokers to register with the state in addition to registering with FINRA. You can look up your broker’s CRD number on FINRA BrokerCheck to see if they have the appropriate FINRA licenses and Michigan registration.
Michigan Securities Law Enforcement and Investor Education
The Michigan Corporations, Securities & Commercial Licensing Bureau (CSCL) provides investor education resources. The Securities Division of the Michigan CSCL oversees the registration of brokers and securities.
The state recommends that investors ask the following questions before signing an investment contract:
- Are you registered or licensed to sell securities? If so, what is your registration number? If not, why not?
- What commission or fee will you earn if I buy the investment?
- Who or what entity will be paying you?
- Will you be receiving any benefit other than your commission or fee?
- Are you related to or involved with the investment in any other way than recommending that I buy it?
- Have you ever been sued, disciplined, or had any complaints filed relating to your work as an agent or adviser?
In addition to asking these questions, investors should also look up their potential broker Central Registration Depository (CRD) number on FINRA BrokerCheck.
Michigan Securities Laws
Michigan has its own securities laws that reinforce federal securities laws.
Article 5 of the Michigan Uniform Securities Act states: “It is unlawful for a person, in connection with the offer, sale, or purchase of a security or the organization or operation of a Michigan investment market under article 4A, to directly or indirectly do any of the following:
(a) Employ a device, scheme, or artifice to defraud.
(b) Make an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
(c) Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person.
Examples of Securities Fraud
Some common examples of securities fraud include the following:
- Recommendations of unsuitable investments. Suitable investments take into account factors like an investor’s age, risk tolerance, and time horizon – i.e., how soon they might need to access their funds. (See: FINRA Rule 2111).
- Violations of Regulation Best Interest: Brokerage firms and their representatives are required to exercise care and skill when they make recommendations, and to perform their due diligence and research a security before recommending it to their clients. (Read more about Regulation Best Interest.)
- Misrepresentation and Omission: Brokers may manipulate or deceive their investors by exaggerating an investment’s potential returns or by omitting information about its maturity date or expenses that eat away at the amount of the original investment. (See: FINRA Rule 2020).
- High Stands of Commercial Honor: Many types of investment fraud, including failing to follow instructions and negligence, violate this rule. (See: FINRA Rule 2010.)
- Misleading Advertising. Communications with the public (which include posts on social media and marketing materials) must be free of misleading language. They should also offer a fair and balanced presentation of the facts. (See: FINRA Rule 2210.)
State Enforcement of Securities Law Violations
The Michigan Securities Division helps protect investors with enforcement actions – Michiganders do not have to wait for the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) to bar firms or representatives suspected of fraud.
Fine for Allegedly Unreasonable Fees
Michigan can impose fines when brokerage firms violate state securities laws. In 2023, Michigan was part of a multi-state $12.4 million settlement with brokerage firm Raymond James. The Consent Order alleged that Michigan Raymond James customers investors paid $469.539.05 in unreasonable fees for equity transactions. This alleged misconduct took place over five years. In some cases, commissions allegedly exceeded 90% of the principal value of the investor’s transaction. Michigan securities fraud lawyers often take on cases like these.
In addition to the restitution payment paid to Michigan investors, Michigan also collected $75,000 for its CSCL Securities Investor Education and Training Fund.
Brokerbank Securities Allegations
According to a disclosure dated February 3, 2021, Michigan revoked BrokerBank Securities’ broker license following allegations that the firm failed to supervise a representative. Michigan further alleged that revoking the brokerage firm’s license was in the public’s best interest. FINRA eventually expelled the firm, but not until 2023.
Southern Trust Securities License Allegations
On April 24, 2019, Michigan threatened to revoke Southern Trust Securities’ license following allegations that the firm impeded inspection of its records. The firm agreed to comply with Michigan securities laws and paid a fine of $3,000. You can read a copy of the Consent Order here.
Order for Royal Advisers to Cease Operations
On June 1, 2017, Michigan fined Royal Advisers and one of its representatives for allegedly failing to supervise the firm’s brokers. The state further ordered Royal Advisers to withdraw its registration in Michigan and cease all operations in the state. Michigan alleged that Royal Advisers had “engaged in dishonest or unethical behavior in the securities industry.” (The broker-dealer is no longer registered with FINRA). Royal Advisers also consented to pay Michigan a fine of $5,000.
Michigan Investment Fraud in the News
Investment frauds in the headlines tend to be extreme cases of million-dollar frauds. Investors should know that it is more common for a broker to simply fail to recommend investments that suit an investor’s financial goals and risk tolerance. Losses do not have to be seven figures before the rule violations constitute securities fraud.
- In November 2023, a trucking company owner was sentenced to 17 years in prison for a fraudulent trucking company investment Ponzi scheme. Investors paid money that was allegedly to purchase trucks, and the investors would then earn 77% of the net income generated by the truck’s delivery services. The perpetrator allegedly sent Michigan investors falsified spreadsheets that showed fraudulent truck performance reports. The trucking company owner allegedly swindled 275 investors out of $40 million.
- 2024 saw charges filed against a Michigan man for an alleged $100 million Ponzi scheme. According to the allegations, the fraudster operated a trading firm out of Panama and the Cayman Islands and targeted residents of southeast Michigan. The firm was called “QYU.” (Investors should always be wary of international investments.) The man is currently a fugitive.
Our Miichigan securities fraud lawyers exclusively handle cases that involve registered brokers and brokerage firms. In cases like the Ponzi schemes mentioned above, the judge may order the Ponzi fraudster to return the money to their victims, but the money may have already been spent, making recovery impossible.
How Do I Find a Michigan Securities Attorney Near Me?
Kurta Law attorneys are experts in securities law and provide free consultations. In fact, our Michigan securities fraud attorneys work on contingency and do not collect a fee unless they win your case. Our law firm is based in New York, but our attorneys can travel to you or will arrange to have the hearings take place over video calls. Contact (877) 600-0098 or email info@kurtalawfirm.com. You can also reach out via the live chat.