Minnesota Securities Fraud Lawyer
Minnesota securities fraud lawyers represent defrauded investors. While the Minnesota Department of Commerce does take steps to prevent fraud, it cannot guarantee that investors will recover their losses. If an investor lost money on a risky security recommended by a stock broker or investment adviser, they may be able to recover their losses via FINRA arbitration. Investment contracts typically include a pre-dispute arbitration clause that requires investors to use arbitration to resolve disputes.
FINRA arbitration is different from a civil lawsuit, and Minnesota investment fraud lawyers specialize in these types of proceedings and can offer helpful guidance and expert insights.
Minnesota Securities Laws
Minnesota Blue Sky laws address securities fraud. “Blue Sky” laws are state statutes that build on the 1933 “Truth in Securities Act” which prohibits deceit in the sale of securities. Lawmakers implemented this law as a way to restore faith in the securities market following the 1929 stock market crash.
Chapter 80A of the Minnesota Statutes defines securities fraud:
(a) It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities or that, for compensation and as part of a regular business, issues or promulgates analyses or reports relating to securities:
(1) to employ a device, scheme, or artifice to defraud another person; or
(2) to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.
The Minnesota Department of Commerce
The Minnesota Department of Commerce oversees the registration of securities and the licensing of financial professionals, including brokers and investment advisers. Minnesota law requires brokers and broker-dealers to register with the state. The State does offer exemptions from this rule, listed in Chapter 80A.56 of the Minnesota Statutes.
Enforcement Actions by the Minnesota Department of Commerce
These are just a few examples of recent enforcement actions. You can read the complete list here.
- In August of 2023, The Minnesota Department of Commerce announced that investors may be able to recover losses following the bankruptcy of Lear Capital. Lear Capital allegedly used deceptive sales practices in its marketing materials.
- Minnesota has also alleged that a cryptocurrency platform called Nexo Capital sold unregistered securities. Allegedly, its crypto asset lending products fit the definition of a security and therefore should have registered with the state.
- Minnesota also joined a multistate agreement to settle with Robinhood Financial over its platform’s operational failures.
Elder Financial Exploitation in Minnesota
Under the Safe Seniors Financial Protection Act, the Minnesota Department of Commerce encourages financial professionals who suspect elder financial abuse to report to the Minnesota Adult Abuse Reporting Center. Financial professionals may also hold or delay transactions and disbursements as well as notify trusted third parties.
What Types of Cases Do Minnesota Securities Fraud Attorneys Handle?
Investors should be aware of the most common types of broker fraud. Look out for the following types of misconduct:
Unsuitable Investments. Investments can be unsuitable if they violate the suitability criteria outlined in FINRA Rule 2111. For instance, brokers must not recommend securities that are overly risky given an investor’s financial goals. Brokers also must not over-concentrate investments in an account or execute an excessive number of transactions that will make it unlikely for a portfolio to generate a return for the investor.
Misrepresentation and Omission. Brokers must accurately characterize an investment’s risks and potential returns. They must also not omit material information, such as information regarding fees and potential tax liabilities.
Selling Away. If a broker solicits you for an investment outside of their firm, they may be engaging in a prohibited outside business. Investors should only agree to purchase securities offered by the brokerage firm. For that reason, investors should be cautious of messages from a broker’s personal phone or email – brokers should only communicate with investors through official channels so their communications can be supervised by the firm.
Failure to Supervise. Brokerage firms are required to supervise their registered representatives.
Regulation Best Interest. Brokerage firms must disclose any conflicts of interest. Brokers are also required to perform their due diligence to determine if there are securities that offer similar benefits with fewer costs before they recommend an investment.
Financial Products in Minnesota Investment Fraud
In addition to prohibited broker practices, investors should also carefully consider before they buy any of the following risky securities:
- Variable Annuities
- Oil and Gas investments
- Leveraged and/or Inverse Exchange-Traded Funds
- Business Development Companies
- Closed-End Funds
- REITs
- Structured Products
- Alternative Investments
- Private Placements
If you believe your broker recommended one of these investments and they did not fit your best interest, you may want to consider consulting with a Minnesota securities fraud attorney.
Kurta Law Can Help
Our Minnesota securities attorneys offer free case evaluations. We only earn a fee if your case settles. Call (877) 600-0098 or info@kurtalawfirm.com to discuss the details of your case today.