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What Does a Securities Lawyer Do?

Many consumers have taken a greater interest in securities law, especially after the financial scandals over the past several years that caused such significant economic losses. Perhaps the most well known was the collapse of Enron in 2001 which was triggered, in part, by deceptive accounting practices that significantly overvalued the company and produced overinflated stock prices to the detriment of its shareholders and investors. In another case, MF Global, a major commodities brokerage firm, illegally misappropriated nearly $1 billion of customer funds to support its own operations before declaring bankruptcy in 2011, according to a complaint filed by the U.S. Commodities Futures Trading Company in 2013.

There are a number of federal and state laws that apply to publicly-traded companies like these which are designed to protect shareholders and investors and to enforce compliance. In the case of MF Global, for example, the government initiated an enforcement action and was able to recover around $1.2 billion from the company's assets as restitution.

Given the extent of harm that can be caused by securities fraud or wrongdoing and the increased relevance of securities law, securities lawyers have become a significant resource for consumers. A securities lawyer is an attorney that specializes in the often complex and changing laws and regulations that apply to financial investments. These specialists can provide significant benefits to you both in planning your investments as well as in recovering any losses from wrongdoing.

See FindLaw's Securities Law section for more articles, including Questions About Securities Law. If you would like to submit a tip or a complaint regarding securities fraud or other wrongdoing see the SEC's Enforcement Tips and Complaints.

What Are Securities Laws?

Securities laws are the laws and regulations governing financial instruments such as stocks, mutual funds, and bonds. These rules are designed in part to prevent fraud, insider training, and market manipulation, while also promoting transparency through a complex system of reporting and enforcement.

Federal law requires publicly-traded companies to file regular reports with the Securities and Exchange Commission (SEC). These reports disclose information pertaining to their financial condition, their operating results, and the compensation their executives are paid, among other information. Investors and brokers, as well as financial markets in general, rely on the accuracy of such information to shape investment decisions. Federal law also prohibits the use of insider information for personal gain or for market manipulation.

For more information on securities law in general, see FindLaw's section on Securities Law Basics.

How a Securities Lawyer Can Benefit You

A securities lawyer can play a critical role in protecting your investments. Initially, as you are planning your investments, a securities lawyer can assist in researching the financial history and health of companies based on their reporting or in advising as to the legal obligations owed to you by a broker, which include:

  • A duty to determine whether a recommended product is specifically suitable to you
  • A duty to disclose all necessary information concerning any recommended investments
  • A duty to place your interests above his or her own (a fiduciary duty)

In addition, a securities lawyer can advise you on the common signs of securities fraud or mismanagement of your investments and what to be watchful of as you invest. A securities lawyer can also advise you as to the many types of claims that are available to investors who suffer losses that are not attributable to normal market forces, including:

  • Breach of fiduciary duty
  • Conflict of interest
  • Churning (excessive trading to increase broker's fees)
  • Failure to diversify
  • Failure to supervise
  • Ineptitude or malpractice
  • Insider information
  • Market manipulation
  • Misrepresentation
  • Omission of facts
  • Risky investments
  • Trading without permission
  • Unsuitability

Finally, a securities lawyer can represent you in any litigation arising from your investments, to include a shareholder's derivative action, a class action suit, or a suit against your broker. Because many broker agreements contain arbitration clauses, you may be limited in your ability to pursue an action against your broker in court. Because of this, it is a good idea to have a securities lawyer review and explain any broker agreement with you before signing.

Securities lawyers also frequently represent corporate clients in the transactional work involved with initial public offerings, private sales of securities, issuance of stock or other securities and mergers and acquisitions. In this capacity they also assist companies in complying with securities laws and regulations which ultimately serves to benefit consumers.

Talk to an attorney specializing in securities law if you have additional questions or need legal help.

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