Federal and state securities laws prohibit the use of material misstatements and manipulative acts in connection with the purchase or sale of any security. Generally, if a person or class of persons rely on an intentional misstatement or omission by a corporate entity in purchasing or selling shares in that entity, and as a direct result suffer economic injury, these persons may have a claim against that corporate entity for that injury. These types of securities fraud claims are typically brought against the targeted corporation as Rule 10b-5 claims, under which the courts have implied a private right of action for civil suits. In addition to actionable conduct by corporations, individual investors may also lay claims against certain conduct of their broker-dealers that resulted in injury to the individual investor. These kinds of claims are often subject to mandatory arbitration clauses requiring the litigants to arbitrate the claims within the forum of the Financial Industry regulatory Authority (FINRA). FINRA actions, when brought by investors, allege common claims, that the broker “churned” securities in the investor’s account solely to earn commissions, or that the broker purchased securities that are unsuitable for the investor, as examples.
Napoli Shkolnik's securities fraud attorneys are dedicated to enforcing investor rights under the various securities rules, regulations, and laws. Over the years, our attorneys have brought many successful securities class action lawsuits against companies that violated securities laws.
Securities law offers protection to investors who have been deceived or treated unfairly by those they have trusted with their investments. Without securities laws, investors would be entirely at the mercy of large corporate interests, who often do not care about the individual as much as they do about corporate profit.
Securities Regulations designed to Protect Investors
Securities regulations were enacted in response to widespread violations of investor trust through deceptive and meaningless disclosures by companies in the early 20th Century. Following the Stock Market Crash of 1929 and the resulting Great Depression, the U.S. Government created several securities laws and regulations as well as the Securities and Exchange Commission (SEC) to ensure such violations did not continue to occur.
Some of the major laws and regulations for the securities industry include: