Utah Investment Fraud Lawyers
The Securities Fraud Lawyers at Greco & Greco, P.C. regularly represent residents from across the country, including Utah, in disputes with their financial advisors and securities salespersons, involving claims of suitability, violations of FINRA Rules, violations of Reg BI, negligence, fraud, misrepresentation, ponzi schemes, breach of fiduciary duty, professional malpractice, and other claims. Please contact Scott Greco for a free attorney consultation about your case. We serve clients from all areas of Utah, including Salt Lake City, West Valley City, Provo, West Jordan, Orem, Sandy, St. George, Ogden, Layton and South Jordan.
Decades of FINRA Arbitration Experience
If an individual investor has a dispute with a FINRA brokerage firm or stock broker, he/she most likely will have to arbitrate through FINRA’s Dispute Resolution system. FINRA Arbitration holds arbitration hearings in one Utah city, Salt Lake City.
Utah Securities Regulator and Utah Securities Act
The Utah Division of Securities regulates the securities industry in Utah, and states as follows regarding its mission: “The Division seeks to create a level playing field in the investment industry and ensure minimum standards of competence, training, and fair-dealing by issuing licenses to broker-dealers and investment advisers and all of their agents and representatives…” Its website provides information on Utah Securities Laws and Regulations, and provides a means for customers to file complaints against their financial advisors.
Utah’s Uniform Securities Act is similar to many states’ Acts with regard to providing for civil liability for the commission of securities fraud in the sale of securities (including untrue statements of material fact or omissions of material fact). The statute provides for rescission (or damages if the investor no longer owns the security) reasonable attorneys fees, and interest.
Contingency Fees for Utah Investors
Greco & Greco understands that many of our clients have lost their life savings and cannot afford to pay an attorney by the hour. We therefore regularly represent our clients using a contingency fee, where we are only paid a percentage fee out of money recovered through settlement or arbitration award.
Common Legal Claims by investors against their financial advisors in Utah
- Suitability/Regulation Best Interest. Prior to recommending the purchase of specific investments or a specific investment strategy to a customer, a stock broker in Utah is required to determine that the investments are suitable to that particular investor. A suitability determination is based upon many different factors such as age, investment objectives, risk tolerance, employment situation, needs, income, assets, and investment experience. If an advisor’s recommendations of unsuitable investments result in the investor incurring significant losses, that investor may have a suitability claim against the broker and his/her firm. In 2020 brokerage firms’ suitability obligations were superseded by the SEC’s Regulation Best Interest (Reg BI) which requires recommendations of securities or investment strategies to be in the best interest of the customer.
- Churning. Churning occurs when a broker exercises control over an account and allows the broker’s interest in making commissions to override the investor’s interests in the account. When a broker makes a buy or sell recommendation for an account, that broker should have the investor’s best interests based on their investment objectives in mind. If the broker makes excessive buy and sell recommendations for the purposes of generating commissions for the broker by each buy and sell, that broker is engaged in churning the account. Excessive turnover in the assets of the account and/or a high cost to equity percentage are often a sign of churning.
- Unauthorized Trading. Generally, an investor can have two kinds of an account, non-discretionary and discretionary. In a typical non-discretionary account, the broker must consult with and obtain the consent of the customer prior to making a trade in the account. Unauthorized trading occurs when a broker makes trades in a non-discretionary account without the consent of the customer.
- Securities Fraud. Most of the claims in this list are subsets of securities fraud which is employing a device, scheme, or artifice to defraud, or obtaining money by means of untrue statements of material facts and failure to state material facts in violation of Utah blue sky / securities laws or federal law (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5). If a broker makes false statements to an investor or fails to advise the investor of certain important facts, the investor may be able to recover losses incurred resulting from this fraud.
- Margin Disputes. Margin trading involves borrowing money from the brokerage firm to purchase securities greater in value than the equity in an investor’s account. Due to the risky nature of trading on the margin, disputes with brokers often arise as a result of significant losses. If a broker trades on the margin without the knowledge or consent of the investor, the investor may be able to recover the losses resulting from the fraud.
- Ponzi Scheme Investment Scams. Ponzi schemes generally involve promises of high returns by salespersons over short periods of time, but in reality result in stealing from Peter to pay Paul. Because returns to investors in ponzi schemes are often paid out of new investment monies from new investors, the scheme will ultimately fall apart when the new investors dry up, leaving all investors often holding a worthless investment. Financial Advisors and their brokerage firms who sell ponzi scheme fraudulent investments may be found liable for selling unsuitable investments, securities fraud, sale of unregistered securities, failure to supervise, and other legal violations.
- Failure to Supervise Broker. FINRA firms in Utah and elsewhere have a duty to supervise their registered brokers, and their failure to do so may form the basis of various legal claims against them. FINRA Rule 3110 states: Each member shall establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA Rules. Final responsibility for proper supervision shall rest with the member.
Please contact one of our Utah Securities Fraud Lawyers for a free consultation if you believe your financial advisor or stock broker may be liable under one of the above claims, or for other wrongful conduct.