Securities Fraud Litigation

Florida Securities Fraud Litigation Attorney Russell L. Forkey

State Securities Litigation:

The purpose of this post is to provide the reader with a general discussion of state based securities litigation, focusing on the private cause of actions set forth in Florida Statue 517, the Florida Securities Investor Protection Act. In reading this article, please keep in mind that this discussion is not designed to be complete in all material respects. It is being posted for general educational purposes and should not be relied upon as legal advice. If you have any questions relative to state "blue sky" laws, you should contact experienced litigation counsel.

A blue sky law is a state statute that regulates the offering and sale of securities to protect the citizens of its state from, among other things, securities fraud. The specific provisions of these laws vary from state to state. Each state's blue sky law is administered by a duly created regulatory authority, which has the power to and has adopted various rules and regulations relating to the enforcement of its deligated duties.

Blue sky laws have been around since the early 1900's. Through the years, state blue sky laws have complemented and, in certain circumstances, duplicated federal securities laws. However, much of this duplication relating to the registration of securities and the regulation of broker/dealers and investment advisors was preempted by the National Securities Markets Improvement Act of 1996 (NSMIA). However, NSMIA did not preempt individuals or entities from seeking redress, in private actions, for fraud under their respective state statutory fraud statutes or for such common law claims as fraud in the inducement or negligent misrepresentation. One caveat is that in 1998 the United States Congress passed the Securities Litigation Uniform Standards Act, which preempted state securities fraud claims that were effectively class action law suits by investors, even if the claim was not filed as a class action.

Florida Statutory Security Claims:

In order to understand the breath of the Florida statutory remedy for securities fraud, one need look no further than the language of the statute itself.

Florida Statute 517.301:

Florida Statute 517.301 provides, in relevant part for this post, as follows:

(1) It is unlawful and a violation of the provisions of this chapter for a person:

(a) In connection with the rendering of any investment advice or in connection with the offer, sale, or purchase of any investment or security, including any security exempted under the provisions of s. 517.051 and including any security sold in a transaction exempted under the provisions of s. 517.061, directly or indirectly:

1. To employ any device, scheme, or artifice to defraud;

2. To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

3. To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a person.

(b) To publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, communication, or broadcast which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received directly or indirectly from an issuer, underwriter, or dealer, or from an agent or employee of an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount of the consideration.

(c) In any matter within the jurisdiction of the office, to knowingly and willfully falsify, conceal, or cover up, by any trick, scheme, or device, a material fact, make any false, fictitious, or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false, fictitious, or fraudulent statement or entry.

To supplement the statutory provisions of Chapter 517, the Florida Department of Financial Regulation has adopted various regulations as codified in the Florida Administrative Code, which provides guidance for customers and broker/dealers of their duties, obligations and rights under Chapter 517.

There is a plethora of state and federal court cases which discuss various factual circumstances under which a violation of Florida Statue 517.301 has been found to exist. Whether or not your unique factual situation would form the basis of such a violation requires your consultation with experienced securities counsel. This is especially important for the reason that Florida Statue 517.211(2) which details the remedies available to investors for violation of Florida Statute 517.301, in subsection (6) provides that "in any action brought under this section, including an appeal, the court shall award reasonable attorneys' fees to the prevailing party unless the court finds that the award of such fees would be unjust.

Additionally, there may be other provisions of Florida Statue 517 such as sections 517.07 (Registration of Securities) and 517.12 (Registration of dealers, associated persons, investment advisors and branch offices), which may be relevant to you matter.

Also, it is important to bear in mind that common law claims such as fraud and deceit, negligent misrepresentation, breach of fiduciary duties and breach of contract claims may be made against a brokerage firm and its registered representatives in addition to claims for violation of Florida Statute 517.

Contact Us

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities, commodities and precious metals law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.