What is Securities Law?
Securities are financial investments, like stocks, bonds, and loans. Securities law is a set of rules and regulations that direct how these financial products are issued, bought, sold, and traded. The laws aim to prevent fraud and misuse that leads investors to lose money.
Securities law is important because, in and of themselves, securities have no value. The value comes from the claims they give their owners, and this is all based on information—financial state, markets, regulatory climate, and more. The laws ensure that investors have accurate information about securities so they can make decisions about buying, selling, and trading them.
Important Securities Laws
Both federal and state laws regulate securities. Some of the major federal laws include:
- The Securities Act of 1933. This law requires that investors be given important information about publicly sold securities. It outlaws fraud, deceit, and misrepresentation in that information.
- The Securities Act of 1934. This created the Securities Exchange Commission (SEC) and gave it authority over the industry.
- Investment Advisers Act of 1940. This law requires investment advisers to register with the SEC. They must follow ethical guidelines that protect investors.
- Sarbanes-Oxley Act of 2002. In addition to creating the Public Company Accounting Oversight Board, this law included several reforms. These address financial disclosure, corporate responsibility, and accounting fraud.
- Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Following the financial crisis of 2008, President Obama signed this law to reform banking regulations. It addresses credit ratings, trading restrictions, consumer protections, and corporate governance and transparency.
What is a Securities Lawyer?
A securities lawyer is a legal professional specializing in the laws and rules that govern financial investments. These are complex and often change, so securities lawyers must keep up to date on all laws, policies, and regulations.
What Does a Securities Lawyer Do?
With extensive knowledge of the complicated securities industry and its laws, securities lawyers work with clients in all aspects of investments. Some examples of the specific things they do for clients include:
- Provide Advice. A big role for a securities lawyer is providing advice. They are not financial advisers, but they understand the industry and the laws that regulate securities transactions. For individual investors, a lawyer can provide advice about suspicious transactions or potential fraud.
- Research. It’s important to have information about companies before investing, and a securities lawyer can do the research to provide it. They’ll investigate the financial health of a potential investment, its history, and other details.
- Litigate. If you suffered financial losses due to securities violations or crimes, a lawyer would represent you in a lawsuit. They can help you recover damages.
Do I Need a Securities Lawyer?
Many individual investors do not need a securities lawyer. If you are a casual investor or simply planning for retirement, a financial advisor is usually adequate to meet your needs. However, if you are more serious about investing, want to invest larger sums of money, or have been a victim of securities violations, you need a lawyer.
If you’re not sure you have been victimized by fraud, or you suspect your financial advisor has done something wrong, talk to a securities lawyer. They can look over your investment information and determine if anything illegal occurred.
Most importantly, you need a securities lawyer if you have lost money due to illegal practices. Securities lawyers represent their clients in filing lawsuits against those responsible. They may negotiate a settlement or litigate in court to recover damages for the losses.
Signs of Securities Fraud
One of the most important reasons to hire a securities lawyer is if you have been a victim of securities fraud. Securities violations occur at all levels, impacting the biggest corporations and individual investors. Know some of the signs you may have been victimized by securities fraud so you can contact a lawyer to help you:
- Your broker has stopped returning your emails and phone calls.
- You’ve been paying capital gains taxes when your account value is going down.
- You’re losing a lot of money on your investments.
- You’re losing money even though the market is generally going up.
- Your broker has made risky investments without your approval or investments that don’t seem aligned to your goals.
- Your broker isn’t providing you with any information about your investments.
- You felt pushed into investments you didn’t like or understand.
None of these prove you have been a victim of fraud, but they are suspicious. Talk to a securities lawyer about your concerns.
Finding a Securities Lawyer
If you need a securities lawyer to protect your interests in investments, find an individual or a firm with special expertise in this area of the law. It is complicated and changeable. A general lawyer or a lawyer with a specialty in another area of the law will not be your best advocate. Some good sources for a securities lawyer referral include:
- A lawyer you trust and who helps you with other legal matters
- Your state or local bar association
- A financial advisor you trust
- The Public Investors Arbitration Bar Association
It’s important that you hire someone who truly specializes in this complicated area of the law. Make sure they can prove their experience with similar clients and positive outcomes. They should be able to provide client references and offer a free initial meeting to go over your situation.
When you find yourself in a bad situation with investments, you stand to lose a lot of money, maybe everything. Trust in a good securities lawyer to advocate for you, to provide knowledgeable advice, and to take on those responsible so you can recover what you lost.