Since Utah borders Colorado, and I live in Colorado, I am more familiar with its securities laws and regulations and Utah arbitrators. Because arbitrators are from the state or region where the investor resides, my familiarity with the arbitrator roster and individual arbitrators in Utah and surrounding states is a significant benefit. And remember that I do not need to be licensed in the state of Utah in order to represent Utah investors in securities arbitrations. I don’t even need to affiliate with local counsel. I also have the benefit of the knowledge of my husband Douglas Schulz ( Invest Securities Consulting ), who has been hired in over 1,140 securities related matters and testified in over 637 FINRA arbitrations and civil cases regarding investment and brokerage disputes. Because the majority of his expert work is also in Colorado and surrounding states, he too is very familiar with Utah securities arbitrators and arbitrations.
Securities misconduct comes in many different forms and every case is different. Sometimes, brokers churn accounts. Churning is the excessive buying and selling of securities for the purpose of generating commissions. Other times, brokers misrepresent or omit the risks of securities. Most frequently, brokers sell unsuitable securities to investors.
Utah investors are protected by legislative statutes, both federal and state, but also by industry rules promulgated by FINRA and the SEC that prohibit brokers from engaging in churning, unauthorized trading, fraud, unsuitable sales, and other forms of misconduct. Below are useful links and resources covering some of the investor protections available in the State of Utah.
The Department of Commerce, Securities Division - The Utah Division of Securities is the state agency that regulates the securities (investment) industry in Utah and enforces its securities laws. The Division attempts to ensure minimum standards of competency in the brokerage industry and attempts to ensure fair-dealing by issuing licenses to broker-dealers and investment advisers that do business in the State of Utah. In addition, Utah’s Securities Division’s mission includes a mandate to educate investors in Utah.
The Utah Division of Securities states on its “For Investors” page the following:
Before You Invest
- Research the investment opportunity
- Verify all parties have the appropriate licenses
- Ask questions and keep notes
I have a problem with these bullet points, because they may lead investors to believe that if they DON’T do these things, they don’t have a case. WRONG!!!
Investors have no obligation to research investments their stockbrokers recommend or to verify that their stockbroker has the appropriate licenses. Rather, investors are entitled to rely upon what their stockbroker says about the investment and assume that their broker has the appropriate licenses (particularly if they work at an established broker-dealer). Likewise, investors have no legal obligation to ask questions! It’s the broker who is obligated to ask questions of the investor.
Now, are these three things advisable and prudent to do? Sure, but I will just say that in the hundreds of clients I have represented with excellent results, none of them did any of the above things.!
I love the following graphic on the Utah Division of Securities website:
- The Utah Securities Act is a state law regulating the securities industry. The Act contains provisions for the registration of securities, exemptions and sanctions for violations.
- FINRA is an independent regulatory agency that regulates all broker-dealers in the United States.
- Securities and Exchange Commission (SEC) also creates and enforces the securities laws.
Stoneman Law represents investors in all major Utah cities including Salt Lake City, West Valley City, Provo, West Jordan, Orem, Sandy, Ogden, St. George, Layton, and Taylorsville. Our consultations are free of charge and the firm is only compensated if you recover.Where Do FINRA Arbitrations Take Place in Utah?
All arbitrations for Utah residents take place in Salt Lake City. And remember that arbitrations take place in the state where the investor resides, NOT where the brokerage firm or stockbroker office is located!!Utah Securities News
October 31, 2017. A St. George financial adviser pleaded guilty Monday to defrauding clients of millions of dollars while teaching them fraudulent investment strategies to avoid paying taxes.
According to a news release from the Utah District of the U.S. attorney’s office, Henry Seth Brock, 64, admitted to tax evasion, securities fraud and wire fraud for his role in the scheme.
Brock founded a financial services company eight years ago and served as its president until this year, the release says. As president, he marketed and sold the “IRA Exit Strategy” to potential investors, which he told them was a way to avoid paying taxes on IRA withdrawals.
Brock’s business issued tax forms to his clients, falsely representing that they had invested in his business and incurred losses, which offset the clients’ tax liability. “As a result, Brock caused clients to file fraudulent income tax returns claiming a total of approximately $3.8 million in bogus business losses and resulting in a tax loss of over $1.1 million,” the release says.
I believe that the moral of this story is to be very wary of doing business with small companies and if you do, check out the registration and disciplinary history of all personnel at FINRA.org! the Brock used to be a licensed broker until 2003 when he was barred by the Utah Division of Securities for “acting as an unlicensed broker-dealer agent,” among other things. He did what so many tainted or barred stockbrokers do when they can no longer work in the industry: they operate on the fringes, giving quasi financial advice. Any of the recent victims of Brock’s schemes could have learned what I just told you by simply typing Brock’s name into the following spot right on the home page of FINRA.org:
I firmly believe that investors have no legal obligation to investigate their stockbrokers or financial advisors, however, it is now easier than ever to pull up detailed information about your stockbroker, including prior customer complaints.