Issue name: Securities
Applicable law/agency: Securities and Exchange Commission (SEC), National Association of Securities Dealers
Related topics: Annuities, Breach of Fiduciary Duty, Churning, Edward Jones, Failure to Hedge, Failure to Supervise, Improper Use of Margin, Misrepresentation/Omissions, Overconcentration/Failure to Diversify, Retirement Plans, Securities Unsuitability, Selling Away, Stock Market Losses, Theft, Unauthorized Trading
There are many types of securities misconduct, which may require individuals or companies to seek legal action or arbitration. Common claims include failure to hedge, theft, churning, unauthorized trading and selling away. Such misconduct can cost investors their savings, investments or retirement accounts. The Security and Exchange Commission (SEC) and the National Association of Security Dealers (NASD) regulate the securities industry. One of the tasks of the SEC is ensuring all investors have access to certain information about public companies. The SEC also brings civil action against companies or individuals found to participate in insider trading, accounting fraud or other misconduct. NASD works to protect investors through self-regulation of the securities industry. The NASD can impose sanctions against members who participate in misconduct.
Please choose a legal issue for more:
• Breach of Fiduciary Duty
• Edward Jones
• Failure to Hedge
• Failure to Supervise
• Improper Use of Margin
• Overconcentration/Failure to Diversify
• Retirement Plans
• Securities Unsuitability
• Selling Away
• Stock Market Losses
• Unauthorized Trading
Investors Should be Wary of High-Pressure Sales Calls
The Securities Exchange Commission (SEC), and the North American Securities Administrators Association Inc. (NASAA) issued a Consumer Alert in January 2006 about high-pressure sales calls (sometimes referred to as cold calling) by stockbrokers. The alert was issued due to the increased number of complaints recently received from by the agencies from consumers.
Cold calls occur when an individual receives an unsolicited or unwanted phone call. The caller usually uses high-pressure, persistent tactics to solicit the purchase of securities. This is most frequently for low-priced, speculative securities, although the broker sometimes may refer to more well known securities to gain the attention of the caller or potential investor.
Generally, the broker will pressure a potential investor to invest quickly to avoid missing a “once in a lifetime opportunity”, may indicate that the offer is “good today only”, or will make claims that seem too good to be true. Sometimes the potential investor will receive a number of phone calls in an attempt for the broker to establish a relationship with the individual being solicited and gain their trust.
The Securities Exchange Commission (SEC) has cold calling rules for stockbrokers and dealers in order to protect the public and to ensure the integrity of the industry. For some securities firms, cold calling is a legitimate way to reach potential customers. However, it is generally dishonest brokers who apply significant pressure to get a caller to buy a bad investment or, in some cases, a scam investment.
SEC laws protect consumers by requiring securities brokers to follow several rules. People from the securities industry that are calling to sell something may only call between the hours of 8:00 a.m. and 9:00 p.m. They must state who they are, the firm they represent and the specific purpose of the call. Every securities firm must keep a “do not call” list and consumers must be added to the list upon their request. The SEC rules do not permit a broker to threaten, intimidate, or use obscene or profane language when they call. Repeated calls that annoy, abuse, or harass potential investors are also prohibited. People selling securities must tell the truth, and brokers who lie about any important aspect of an investment opportunity are in violation of federal and state securities laws.