Stockbroker Fraud in Texas
Investments such as equity shares in a company, stocks, bonds, mutual funds, and other investments in a portfolio often fall under the umbrella of securities. Even futures contracts on commodities such as oil, agricultural products, and currencies can be lumped under securities.
Futures contracts in oil are an especially contentious issue in Texas because the industry is more prominent than in some other states, leading to more investors experiencing fraud due to brokers giving misleading information or guaranteeing results, which is a red flag because no qualified broker should guarantee results to their clients.
It is important, as an investor, to understand where your money is going and how changes to your portfolio strategy can affect the return you receive.
Stockbrokers in Texas, also referred to as securities dealer agents, must go through formal exam processes and licensing in order to legally operate in the state. Those associated with a Financial Industry Regulatory Authority (FINRA) member firm must fill out certain forms to register with the Texas State Securities Board.
From there, the prospective stockbroker must take the Series 7, General Securities Representative Examination, or any other more limited securities exam as directed by your sponsoring firm, and either the Series 63, Uniform Securities Agent State Law Examination or the Series 66, Uniform Combined State Law Examination. A qualified stockbroker experiences much on-the-job training from the brokerage firm and must adhere to regulations, as well as enroll in continuing education courses to remain in good standing with their license.
What is Securities Fraud?
Securities fraud is defined as a type of white collar crime under Texas law and the way in which brokers or others involved in the securities industry mislead investors.
The Texas Civil Code states that the statute of limitations in Texas is five years, meaning you have five years from the time the offense occurred to file a suit against the offending parties. A defendant might try to build a number of responses to defend themselves against the accusation, so it is imperative to involve a securities fraud attorney to help provide evidence that you, the investor, have been misled by a broker-dealer or a brokerage.
Texas Securities Fraud Penalties
Texas law considers securities fraud in the state as a felony, and much of the outcome of a case against someone who has allegedly committed this type of fraud depends on the amount of money involved.
Fraud involving less than $10,000 is treated as a third degree felony charge and includes two to ten years in a state prison and/or a fine of up to $10,000.
Offenses exceeding $10,000, but that do not exceed $10,000 in value, are second degree felonies carrying two to twenty year sentences and/or fines up to $10,000.
First degree felonies for securities fraud involve $100,000 or more, and the consequences are severe. Sentences can consist of up to life in prison and/or fines up to $10,000.
Texas Stock Broker Fraud Resources
Texas State Securities Board – Administers and enforces the Texas Securities Act and serves to protect investors while also working to encourage a competitive and free securities market in the state of Texas that increases investor confidence and lead to new job creation in the state.
Securities Search – Resources form the Texas State Securities Board that gives updated information about current approved securities issuers and any notices of exemptions approved.
Investor Publications and Resources – Read general investing resources for Texas investors from the Texas State Securities Board, including online PDFs, pamphlets, and brochures.
Financial Industry Regulatory Authority – Formerly called the National Association of Securities Dealers, Inc. (NASD), The Financial Industry Regulatory Authority (FINRA) self regulates the financial industry, which includes securities such as mutual funds, stocks, bonds, etc. The U.S. Securities and Exchange Commission (SEC) oversees this non-governmental, private entity.
BrokerCheck by FINRA – Investors can use this resource for free to gain better knowledge and information about a broker they either are considering hiring or already work with to oversee their investments.
U.S. Securities and Exchange Commission – With a mission dedicated to protecting investors, the SEC oversees FINRA the the U.S. financial sector in general, with the goal of maintaining efficiently running markets relating to trade, investments, and the economy as a whole.
Contact Our Attorneys
If you have conducted investment transactions in Texas and are concerned your broker or a brokerage firm did not work in your best interest, it is time to take action. Contact the experienced attorneys at Oakes & Fosher today to discuss your case.
