Michigan Securities Fraud Laws

Statutes

Michigan Uniform Securities Act (2002) § 451.2101, et seq.

Definition of the Crime

It is unlawful for a person, in connection with the offer, sale, or purchase of a security to directly or indirectly do any of the following:

1. Employ a device, scheme, or artifice to defraud.
2. Make an untrue statement of a material fact or omit 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.
3. Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person.

It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities, to do any of the following:

1. Employ a device, scheme, or artifice to defraud another person.
2. Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

Crime Classifications and Penalties

• Class D felony, punishable by up to 10 years in prison and/or a fine of up to $500,000 for each violation.
• An individual convicted of violating a rule or order under this act may be fined, but shall not be imprisoned, if they did not have knowledge of the rule or order.

Civil Liability for Acts of Securities Fraud

• A purchaser may seek to recover the amount paid for the security (minus any income received) and interest at 6% per year from the date of the purchase, costs, and reasonable attorney fees determined by the court, upon the tender of the security, or for actual damages.
• A purchaser that no longer owns the security may recover actual damages.
• Actual damages are the amount that would be recoverable upon a tender minus the value of the security when the purchaser disposed of it (i.e. income received).