Texas Securities Fraud Lawyer
Texas securities attorneys represent clients who want to hold their brokerage firms responsible for recommending high-risk investments. Most investors sign investment contracts with pre-dispute arbitration clauses that require them to settle disputes using a process called FINRA arbitration. Arbitration is a civil proceeding using a platform provided by the Financial Industry Regulatory Authority (FINRA). Cases often settle before entering arbitration.
If you have suffered losses due to investment fraud at the hands of a stock broker or investment adviser, you should consider enlisting the services of a Texas securities fraud attorney.
What Types of Cases Do Texas Securities Fraud Lawyers Handle?
There are a variety of types of investment fraud. Texas investors should be aware most common types of cases seen in investor disputes:
- Unsuitable investments: Many investments simply carry too much risk for most investors. The following products are often at issue in unsuitable investment arbitration cases:
- Non-tradeable REITs: These types of REITs are illiquid and cannot be sold on the stock exchange.
- Private placements: These securities are also not listed on the private exchange. They do not register with the SEC, making it difficult for an ordinary investor to evaluate their risks.
- Energy investments: Oil drilling is a speculative endeavor and only the wealthiest investors should take on the risk.
- Penny stocks: OTC stocks, penny stocks, and microcap stocks are low-price stocks that are often the subject of pump-and-dump schemes.
- Pyramid schemes and Ponzi schemes: Registered brokers have professional insights that may make it easier to pass off these scam investments as surefire investing wins.
- Misrepresentations and Omissions: Brokers should provide accurate information regarding an investment’s risks, fees, and tax implications. Any material information that is misrepresented or omitted could be a reason to speak with a Texas securities fraud lawyer.
Blue Sky Laws: Securities Fraud Laws in Texas
States have securities fraud laws called “Blue Sky Laws” that build on the federal securities laws set forth in the Securities Act of 1933. The Texas Securities Act of 2017 states that in addition to registering with the Securities and Exchange Commission, securities and brokerage firm representatives (like stock brokers) must register with the Texas State Securities Board.
Chapter 581 of Texas Civil statutes states that no financial representative may:
- Engage in any fraud or fraudulent practice
- Employ any device, scheme, or artifice to defraud,
- Knowingly make any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading,
- Engage in any act, practice, or course of business which operates as a fraud deceit.
Texas Penalties for Securities Fraud
If the Texas State Securities Board (TSSB) determines a broker has violated the Texas Securities Act, they may refer the matter to the Attorney General for criminal prosecution.
- According to Texas Civil Statutes, anyone who sells securities without being registered as a broker is guilty of a felony in the third degree if the amount involved is less than $10,000.
- If the amount is over $10,000 but less than $100,000, it is a felony in the second degree, and for amounts over $100,000, a felony in the first degree.
- It is also a third-degree felony to sell securities that have not been registered with the State of Texas.
The Texas State Securities Board
The Texas State Securities Board oversees the sale of securities in the state. According to its website, “The Texas State Securities Board vigorously enforces the Texas Securities Act. The agency’s Enforcement staff is charged with the detection and prevention of violations of the Act…” Texas may revoke broker licenses, hand down administrative fines, and deny or revoke the registration of securities.
Texas brokerage firms and their broker-dealers must comply with Texas registration form and fee requirements. Failure to do so may result in the suspension or revocation of a license.
Texas Securities Fraud Enforcement Actions
TSSB regularly files enforcement actions designed to protect Texas investors from securities fraud.
Abra Boost
In June 2023, the Texas State Securities Board filed enforcement actions against Abra Earn and Abra Boost. These entities, along with the CEO, allegedly engaged in the concealment of financial information regarding defaults on loans and transfers of assets to Binance. Following a warning from the TSSB in October 2022, Alba allegedly ceased selling investments in Abra Earn and began selling investments in Abra Boost.
GSI Exchange
The Texas State Securities Board may coordinate with other state regulators in order to bring an action in a case of alleged securities fraud. For instance, in September 2023, the Texas State Securities Board announced a settlement with GSI Exchange after working with the Arkansas Securities Commission and the Alabama Securities Commission to file parallel administrative enforcement actions. GSI Exchange offers securities in the form of precious metals. Texas alleged that GSI Exchange functioned as an unregistered investment adviser and did not disclose information regarding the markup that was charged to clients.
Bigwhale.io
In October 2023, the Texas Securities Commissioner entered an Emergency Cease and Desist Order against Bigwhale.io, an alleged multi-level marketing scheme that claims hackers stole $6 million in investor funds. The Order alleges that Bigwhale.io is refusing to identify its principals or the location of its offices. Bigwhale.io allegedly functioned as Ponzi scheme, using deposits from new investors as payments to previous investors.
What Can a Texas Securities Attorney Do for Me?
FINRA and the State cannot provide you with legal advice. Even if you are not sure if you have a case, you should consult with an investment fraud attorney. Texas authorities cannot always catch securities fraud, and enforcement actions may not necessarily result in a return of your investment fraud losses.
Texas securities fraud lawyers can help you evaluate your case. Kurta Law securities attorneys offer free case evaluations and only collect a fee if the case ends with a settlement. Call (877) 600-0098 or email info@kurtalawfirm.com.