Connecticut Securities Fraud Laws

Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016

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Both federal and state laws govern the crime of securities fraud in Connecticut. The crime involves engaging in any kind of fraudulent or deceptive practice dealing with the sale of securities. This includes dealing in securities in any way without being a registered dealer or agent or dealing in securities issued after September 6, 1955 and not being registered or having a permit to do so.

Considered a white collar crime, securities fraud can be committed when a corporate officer or director makes a statement that misrepresents, withholds or distorts information relating to the company's stock (i.e. its value), the officer or director unlawfully discloses that information and an individual or entity acts on that unlawfully disclosed information.

Statute of Limitations

A state prosecutor only has a limited amount of time to bring a criminal case against anyone accused of securities fraud. A Connecticut criminal statute of limitations will run only while the alleged criminal remains visible and in the state where the crime occurred. If the suspect is out of the state or otherwise living in hiding, this will pause, or “toll,” the statutory clock. The clock resumes running, so to speak, if the criminal reenters the state. The statute of limitations for securities fraud is five years from the date of the incident.

What if I am a Defrauded Investor?

Investors from Connecticut have several options to recover investment losses under Connecticut law:

  1. File an arbitration claim;
  2. File a complaint with Connecticut Department of Banking, Securities and Business Investment Division; or
  3. Both.

FINRA Arbitration Claims

FINRA arbitration is the process by which investors may sue their brokerage firm and/or financial advisor for securities fraud losses. Your FINRA arbitration hearing may be held at a location close to the investor depending upon various factors, including where the investor lived when the dispute arose

The following table highlights the main provisions of Connecticut's Security Fraud Law. See Securities Law (Small Business) for more general information on those topics.

Statute Connecticut Uniform Securities Act Section 36b-4, et. seq.
Types of Securities Fraud

The term securities fraud covers a wide range of illegal activities, all of which involve the deception of investors or the manipulation of financial markets.

  • High Yield Investment Fraud;
  • Ponzi Schemes;
  • Pyramid Schemes;
  • Advanced Fee Schemes;
  • Foreign Currency Fraud;
  • Broker Embezzlement;
  • Hedge Fund Related Fraud;
  • Late Day Trading.
Defenses to Securities Fraud

 

  • Lack of knowledge;
  • The high managerial agent of the corporation performed his/her due diligence to ensure that securities fraud was not committed;
  • The agent was a registered dealer or agent in the security;
  • Entrapment;
  • No one acted on the disclosed unlawful information.
Penalties

Securities fraud prosecuted in a Connecticut state court may result in a fine, imprisonment, or both.

Note: State laws are constantly changing -- please contact a Connecticut criminal attorney or conduct your own legal research to verify the state law(s) you are researching.

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