US SECURITIES FRAUD

If you invest in securities and have experienced problems with your investments, your stockbroker or investment advisor, you may be a victim of securities fraud. Most investment losses are the result of market forces - factors which have nothing to do with securities fraud.

Stockbrokers do not have a crystal ball and they are not guarantors of investments. But if your losses have been the result of fraud or a wrongful action, you ought to know because you may be able to do something about it and recover your losses.

Many of the leading mutual fund families are currently under investigation for allegedly participating in schemes which resulted in a dilution of the value of the funds to the detriment of long-term mutual fund shareholders.

Securities investing and trading is carefully regulated by rules and laws for the protection of public investors. The violation of these rules, particularly through various deceptive actions and schemes to cheat or take advantage of investors, is commonly known as securities fraud.

The law is generally intended to prevent anyone from using a scheme to defraud, make untrue statements, or fail to make a statement that deceives investors. It can also include market manipulation and theft from security accounts.

COMMON INVESTOR COMPLAINTS

• Fraud and misrepresentation
• Negligence and malpractice
• Breach of fiduciary duty
• Trading without permission
• Excessive trading ("churning")
• Use of insider information
• Unsuitable trading
• Margin issues

Most investors who have been defrauded do not know what happened to their investments until it is too late. But even after the losses have occurred, the law provides a mechanism for investors to recover their losses which were caused by a stockbroker's misrepresentations or abuse of the account.

COMPLAINT RESOLUTION

A procedure has been established for the resolution of stockbroker/customer disputes in an efficient and economical manner through arbitration. Stockbrokers and brokerage firms are subject to binding arbitration of complaints regarding customer accounts. This provides the opportunity for defrauded customers to present their claims before an impartial panel of arbitrators whose decision will be binding on all the parties.

In addition, federal and state laws provide a legal remedy for defrauded investors to recover their losses. Investors may also be entitled to compensation for the loss of income that their investments should have been generating, interest on the losses and legal fees.

FEDERAL SECURITIES LAW

Federal securities laws include anti-fraud provisions which contain private rights of action for defrauded investors. The federal securities laws provide a cause of action in the event that a broker engages in any scheme to defraud, makes untrue statements or material omissions or engages in any practice that deceives the investor.

This covers misrepresentations or failures to disclose information necessary in the context of the statements, and numerous other instances in which a broker abuses a customer's account, such as through unsuitable trading, insider trading, stock manipulation, churning and unauthorized trading.

STATE "BLUE-SKY" LAW

Many state securities laws, known as "blue sky" laws, contain anti-fraud provisions which include private rights of action. These tend to follow the federal provisions as to prohibited stockbroker activity, in particular in those states which have adopted the Uniform State Anti-Fraud Securities Act.

However, it should be noted that certain states do not include a private right of action for individual investors under their state blue-sky laws. Investors in such states must rely upon the federal causes of action and common law rights.

Stockbrokers and brokerage firms have certain obligations and duties to their customers. And investors have a right of recourse if their account has been abused or if they have been defrauded by an investment advisor. An investor who believes that he or she may have been the victim of an unscrupulous stockbroker should consult with an attorney to learn more about their rights under the circumstances.