Securities Violations

At Altamirano PLLC, we represent investors nationwide who have suffered losses due to securities law violations. When brokers sell unregistered products, omit material facts, or misrepresent risks, they violate federal and state securities laws. Investors have clear rights under these laws to recover their losses, and we pursue those claims aggressively in FINRA arbitration.

What Are Securities Violations?

Securities violations occur when financial advisors, brokers, or brokerage firms breach securities laws, FINRA rules, or SEC regulations. Common violations include:

• Misrepresentations,
• Omissions,
• Negligence,
• Unsuitable recommendations,
• Unauthorized trading,
• Churning,
• Selling away, and
• Supervisory failures.

Violations may also involve sales of complex and illiquid products.

These actions violate FINRA’s rules of commercial honor (Rule 2010), suitability (Rule 2111), and supervision (Rule 3110). They also trigger significant remedies under state securities laws designed to protect retail investors.

Florida Securities and Investor Protection Act

The Florida Securities and Investor Protection Act, Section 517.011 et seq., prohibits both registration violations and antifraud violations. Registration violations occur when brokers sell unregistered securities or when unregistered firms operate in the state. Liability is automatic in those cases.

Section 517.301 makes it unlawful to obtain money by an untrue statement of material fact, to omit material facts that make other statements misleading, or to engage in practices that operate as a fraud or deceit. Claimants who are damaged are entitled to relief under the statute. A finding of a violation entitles Claimants to seek an award of costs and attorney’s fees.

Florida’s remedy is statutory rescission. If an investor still owns the security, he or she can tender it and recover the purchase price plus statutory interest. If it has been sold, damages equal the purchase price plus interest minus the value received at sale, less any income collected. This statutory formula is a powerful tool for harmed investors.

Rescission damages under Chapter 517 are mandatory. Once a court or arbitration panel finds a violation, rescission damages must be awarded. Decisionmakers cannot substitute out-of-pocket damages or other alternative measures. Because the statute is designed to deter misconduct, defendants are not allowed to “net” damages. If a brokerage firm made multiple unlawful sales, some profitable and some not, the law does not permit the firm to offset gains against losses. Each unlawful sale stands on its own.

In egregious cases, Florida law also allows for punitive damages. Under Florida Statutes §§ 768.72, 768.73, and Chapter 517, an arbitration panel can award punitive damages when a Respondent acts with actual knowledge of the wrongfulness of its conduct and the high probability that injury would result. This added remedy underscores Florida’s commitment to deterrence.

Florida Arbitration Awards

Arbitration awards show how Florida’s securities laws protect investors in practice and can be asserted in FINRA arbitration.

• Structured Notes: In one case, investors alleged breach of fiduciary duty, negligence, fraud, and violations of Chapter 517. The panel awarded more than $26 million in compensatory damages and over $78 million in punitive damages. The award also included statutory interest and attorneys’ fees equal to 25% of the damages, as permitted under Chapter 517 and Florida’s punitive damages statutes.
• Unauthorized Trading: A retired couple was convinced to liquidate a blue-chip portfolio worth $600,900. The funds were used for unauthorized trades in a thinly traded OTC stock designed to defraud investors. In a stipulated award, the firm admitted violating Sections 517.07 and 517.301. Investors recovered more than $740,000 in damages, interest, and attorneys’ fees.
• Negligent Omissions: A broker failed to conduct due diligence and negligently omitted to disclose material facts about investments. In a stipulated award, the arbitrator found a violation of Chapter 517 and awarded over $107,000. The Claimants were also entitled to seek costs and attorneys’ fees.

California Corporations Code

California Corporations Code section 25401 makes it unlawful to offer or sell a security by means of a written or oral communication that includes an untrue statement of a material fact or omits a material fact necessary to make the statement not misleading.

Civil liability is provided under sections 25501 and 25503. Investors may obtain rescission if the securities are still owned, or damages if they have been sold. The measure is the purchase price plus interest, less any value received or income collected.

Unlike federal securities fraud claims, California law does not require proof of reliance or intent to defraud. Investors only need to show they were not given material facts, or were given facts that were not true. The broker’s state of mind is irrelevant.

Section 25503 also creates liability for the sale of unregistered securities, and the burden rests on the seller to prove a valid exemption. If the seller cannot, the investor is entitled to rescission or damages, plus interest.

Following amendments to sections 25501 and 25503, courts and arbitration panels must award reasonable attorney’s fees and costs to a prevailing investor. The fee-shifting provisions are for investors only, which underscores California’s strong commitment to protecting retail investors. Respondents cannot recover their fees if they prevail.

California law also defines a sale “in this state” broadly. A transaction may be considered a California sale if the offer is made in California or the acceptance is communicated from California, even if the investor resides elsewhere. This expansive reach, combined with rescissionary remedies and mandatory attorney’s fees, makes California law an essential remedy for harmed investors.

Oregon Securities Law

Oregon’s securities laws, including ORS 59.135 and ORS 59.137, provide some of the strongest protections for investors. ORS 59.135 makes it unlawful to defraud, to make untrue statements of material fact, to omit material facts that make other statements misleading, or to engage in fraudulent practices in connection with securities sales.

ORS 59.137 imposes liability on violators and those who materially aid them. Investors may recover actual damages, commissions, fees, and interest. Control persons, officers, directors, and managers can be held jointly and severally liable unless they prove they could not reasonably have known of the misconduct. Courts and arbitration panels may also award attorney’s fees to prevailing investors.

In 2023, Oregon expanded investor protections with House Bill 2274. The law authorizes the Division of Financial Regulation to order restitution directly to investors and impose civil penalties of up to $60,000 per violation, with higher penalties when elderly or vulnerable investors are harmed.

Oregon also requires registration of securities, licensing of brokers and advisors, and full disclosure of material facts before securities are sold. These provisions are interpreted broadly in favor of investors, giving harmed clients meaningful remedies when brokers mislead them or push unregistered products.

Contact Us Today If You Suffered Investment Losses From Securities Fraud

If you suffered losses due to broker misconduct or securities law violations, Altamirano PLLC can help. We represent investors nationwide in FINRA arbitration and use state and federal securities laws to maximize recovery.

Call (212) 220-6556 or email [email protected] to discuss your options. We handle these cases on a contingency fee basis. You do not owe a legal fee unless we recover for you.

Contact Jorge Altamirano, Principal of Altamirano PLLC
One World Trade Center, 85th Floor
New York, NY 10007
(212) 220-6556
[email protected] 

Securities claims are time-sensitive. Contact Altamirano PLLC today to speak with an experienced securities arbitration lawyer.