Do you need a New Jersey investment fraud lawyer? Our team of securities lawyers can hold your brokerage firm accountable if they violate New Jersey securities laws. Kurta Law New Jersey securities fraud lawyers have a proven track record of recovering millions of dollars and winning awards against unscrupulous brokerage firms.
New Jersey Securities Law
In order to bolster the protections put in place by FINRA and the SEC, states pass their own “Blue Sky” laws to further shield their residents from securities fraud.
The New Jersey Uniform Securities Law
The New Jersey Uniform Securities Law echoes the language of the Securities Exchange Act of 1934.
“It shall be unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly:
- To employ any device, scheme, or artifice to defraud;
- To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading
- To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person
- To fail to deliver the prospectus filed under the “Securities Act of 1933” to each purchaser of a security registered under that act, in accordance with the prospectus delivery requirements of that act.”
New Jersey also makes the following proh+ibitions regarding the sale of securities.
“A person may not:
- Quote a fictitious price with respect to a security
- Effect a transaction in a security that involves no change in the beneficial ownership of the security for the purpose of creating a false or misleading appearance of active trading.
- Enter an order for the purchase of a security with the knowledge that an order of substantially the same size and at substantially the same time and price for the sale of the security has been, or will be, entered by or for the same, or affiliated, person for the purpose of creating a false or misleading appearance of active trading in a security or with respect to the market for the security;
- Enter an order for the sale of a security with the knowledge that an order of substantially the same size and at substantially the same time and price for the purchase of the security has been, or will be, entered by or for the same, or affiliated, person for the purposes of creating a false or misleading appearance of active trading in a security or with respect to the market for the security. (This is also known as market manipulation.)
- Employ any other deceptive or fraudulent device, scheme, or artifice to manipulate the market in a security.”
New Jersey Securities Fraud Enforcement
Both federal and state agencies oversee the recommendation of investments. In New Jersey, two offices investigate securities fraud:
- The Office of Securities Fraud and Financial Crimes Prosecutions (OSFFCP) is a division of the Department of Law and Public Safety. Its stated aim is to help protect New Jersey residents from market manipulation, Ponzi schemes, and other white-collar financial crimes. The office was created in 2023.
- The Bureau of Securities is part of the New Jersey Division of Consumer Fraud investigates allegations of securities fraud and brings cease-and-desist orders against businesses suspected of securities fraud.
New Jersey Investment Fraud in the News
Multiple recent multi-million-dollar investment fraud allegations levied against brokers reveal just how prevalent securities fraud is.
- The New Jersey Bureau of Securities recently revoked a broker’s registration following allegations that he sold unregistered securities of a startup Tequila company called 6 Degree Tequila. He allegedly misappropriated investor funds for personal use and executed unauthorized private transactions, which violated his firm’s rules regarding outside business activities.
- In November 2023, a New Jersey man admitted to a $294 securities fraud conspiracy. He allegedly used advisory firm Prophecy Asset Management to defraud investors who believed they were investing in low-risk, diversified funds. The fraudster allegedly used the funds to enrich himself.
- One former New Jersey broker has been sentenced to over 8 years in prison after he defrauded his clients out of millions of dollars. He allegedly concealed his theft of investor funds by using funds from new investors to pay clients who wished to make withdrawals. The previously registered broker allegedly managed to steal $3.1 million from investors.
- In a case of alleged elder abuse, the SEC alleges a former New Jersey broker swindled four seniors out of approximately $1.2 million. He allegedly promised to invest their money in fictitious investments and guaranteed a 13% return on investments.
What Types of Cases Do You NOT Handle?
Our New Jersey securities attorneys only take cases that involve FINRA-registered brokers. Not every investment scam involves a registered representative. For instance, there are many cases of investment scams that involve sending money to a stranger after they offer the pretense of a romantic relationship. These are criminal fraud cases. We do not handle criminal cases.
New Jersey Securities fraud lawyers can, however, recover investor losses via FINRA arbitration. Typically, investment contracts come with pre-dispute arbitration clauses. These require investors to file a statement of claim with FINRA and have their cases decided by a panel of arbitrators that FINRA provides. These arbitrators are supposed to be neutral, but a securities attorney can help ensure the process is as fair as possible. FINRA cannot provide wronged investors with legal advice, and brokerage firms always come prepared with legal representation.
What Types of Cases Do You Handle?
Kurta Law’s New Jersey securities fraud attorneys handle cases with seven-figure damages as well as more modest sums. In many cases, investors may not even realize they have suffered unfair losses unless they review their account statements. It is essential to contact a securities attorney ASAP if you have concerns about losses in your investment portfolio – there is a limited timeframe during which you can file a claim.
Here is a list of the most common types of securities fraud cases New Jersey securities fraud lawyers handle:
Elder Abuse: Financial advisors may take advantage of the elderly. In one recent case, a New Jersey financial advisor obtained a Power of Attorney over his 90-year-old client and used it to divert her money to himself through bank transfers and ATM withdrawals.
Unsuitable investments: In many cases, an investment simply poses too much risk for an investor. Investors communicate early in the investor-financial professional relationship how much risk they want. Brokers are required to only recommend investments that suit that risk tolerance, and also take into account factors like the investor’s age, financial goals, and liquidity needs. Broker recommendations should also consider the overall diversification of a portfolio.
Selling Away / Outside Businesses: Be wary of financial advisors who solicit you for investments outside of the firm. If an investment is not approved by the firm, it may be overly risky. Red flags include brokers using unapproved channels to message you about an investment, such as a personal email address.
Failing to Disclose Commissions/ Commission Abuse: Certain products – like mutual funds, variable insurance products, private placements, and non-traded REITs – may come with especially large commissions. Our attorneys are aware of many cases where a broker recommended securities purely for the sake of their associated commissions.
Misrepresentation/Omission: Brokers must disclose material information related to an investment. This includes its risks, potential for returns, maturity date, and any expenses and fees.
Failure to Supervise: Firms are required to supervise their registered representatives and have systems in place that are designed to automatically detect the signs of fraud. For instance, short-term trading of products that are meant to be held for longer periods should trigger a review by firm supervisors.
Check Before You Invest
BOS offers investor education resources, including this checklist for investors to fill out before they sign an investment contract. It asks investors to check for CRD numbers and other relevant licenses.
Once you have gathered the relevant information, BOS recommends that you call the New Jersey Bureau of Securities to ensure that your financial professional is appropriately registered: 1-866-I Invest. You can look up a registered broker on FINRA BrokerCheck using their Broker CRD number.
New Jersey Protecting Investors from Fraud
The New Jersey Bureau of Securities (BOS) has made efforts to protect investors from fraudulent offerings with the following enforcement actions.
- BOS settled with Credit Suisse Securities following its sale of mortgage-backed securities leading up to the 2008 subprime mortgage crisis. Out of the $495 million settlement, $300 million went toward restitution payments for New Jersey investors.
- BOS issued a cease-and-desist to BlockFi, ordering the crypto lender to register its interest-bearing accounts as securities. Registration is meant to protect investors from overly risky investments by forcing issuers to disclose essential information about their business.
- In 2023, the Bureau of Securities brought an enforcement action against Coinbase, alleging the crypto-staking company had violated New Jersey securities laws by selling unregistered securities.
Speak with a New Jersey Securities Attorney
Contact our office for a free case evaluation. We do not charge any fees unless we win your case. Our experienced securities fraud attorneys are experts in FINRA arbitration and other securities fraud-related issues. Call (877) 600-0098 or email info@kurtalawfirm.com.