Skip to main content

California Investment Fraud Lawyer, Securities Attorney, SEC & FINRA Securities Law Firm, and Breach of Fiduciary Duty Attorney

California Financial Dispute Clients can Rely on Bakhtiari & Harrison to Handle All Types of Litigation and Arbitration Regarding Stock Brokers, Financial Investment Firms, and the Securities Industry.

Bakhtiari & Harrison is a law firm, focused on the representation of California based clients in complex arbitration, litigation, and related legal services in matters involving the securities industry. The firm’s partners have extensive experience in securities, employment and regulatory matters. Our focus is on delivering strategic and creative client-centric solutions.

We represent individuals and institutions in securities arbitration and litigation claims before FINRA (Financial Industry Regulatory Authority, AAA (American Arbitration Association) and other arbitration providers.

How a California Investment Fraud Attorney Can Help You

If you are located in California, have experienced financial loss, and are searching for an investment fraud lawyer, Bakhtiari & Harrison may be able to assist you. We represent California based investors and clients with these and other types of investment fraud and financial advisor misconduct cases.

Understanding California Securities Code Violations in Trading Securities

In the complex world of securities trading, adherence to legal and ethical standards is paramount. California has established a robust legal framework to ensure the integrity of its financial markets and protect investors from malpractices. This blog post will delve into some common violations under the California Securities Code, including suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business advantage.

Suitability in California Securities Law

One of the fundamental principles under the California Securities Code is the requirement for investment advisers and brokers to ensure that their investment recommendations are suitable for their clients. According to California Corporations Code § 25216, advisers must consider the client’s financial situation, investment objectives, and risk tolerance when making recommendations. This “suitability” standard mandates a thorough understanding of the client’s needs and the characteristics of the investments being recommended.

A violation occurs when a broker or adviser recommends unsuitable investments, failing to consider the client’s unique circumstances. Such actions can lead to significant financial losses for the client and potential legal liability for the adviser. The California suitability requirement is integral to protecting investors from inappropriate and potentially harmful investment strategies.

Unauthorized Trading in California

Unauthorized trading is explicitly prohibited under California Corporations Code § 25235. This section mandates that brokers obtain explicit consent from clients before executing trades on their behalf. Unauthorized trading involves executing transactions without the client’s knowledge or approval, breaching the fiduciary duty that brokers owe to their clients.

This violation can result in severe financial consequences for the client and disciplinary action against the broker, including fines, suspension, or revocation of their license. Ensuring that clients are fully aware of and approve all transactions is critical to maintaining trust and compliance with California securities regulations.

Misrepresentations Under California Securities Law

California Corporations Code § 25401 addresses misrepresentations and omissions of material facts in the sale of securities. Brokers and advisers are prohibited from making false statements or omitting crucial information that could affect an investor’s decision-making process. Misrepresentations can include false claims about the financial health of a company, the risks associated with an investment, or the expected returns.

Investors rely on accurate and complete information to make informed decisions. Any deviation from this standard undermines market integrity and can lead to significant investor harm. Violations of California § 25401 can result in civil liabilities, including rescission of transactions and monetary damages.

Failure to Disclose Material Information

Failure to disclose material information is closely related to misrepresentations and is governed by the same section, California Corporations Code § 25401. This provision requires full and fair disclosure of all relevant information that an investor would need to make an informed decision. Failure to disclose such information is considered fraudulent and deceptive.

Material information can include details about the financial performance of an investment, potential conflicts of interest, or any other fact that could influence an investor’s decision. Transparency is essential in the securities industry, and failure to uphold this standard can lead to legal action and penalties.

Unfair Business Advantage in California

Unfair business practices in the securities industry are addressed under California’s Unfair Competition Law (UCL), Business and Professions Code § 17200. This broad provision prohibits any unlawful, unfair, or fraudulent business acts or practices, including those in the securities sector.

Unfair business advantage can manifest in various forms, such as insider trading, market manipulation, or exploiting non-public information for personal gain. These practices undermine market fairness and investor confidence. Violations of California § 17200 can result in injunctions, restitution, and civil penalties, providing robust protection for investors and maintaining market integrity.

Common Code Violations in Trading Securities

Several other common violations under the California Securities Code relate to trading securities, including:

  1. Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, violating fiduciary duties as outlined in California Corporations Code § 25218.
  2. Front-Running: Brokers executing orders on a security for their own account while taking advantage of advance knowledge of pending orders from their customers, which can violate California Corporations Code § 25216(a).
  3. Ponzi Schemes: Investment frauds that pay returns to earlier investors from the new capital contributed by newer investors, rather than from profit earned, falling under fraudulent schemes addressed by California Corporations Code § 25401.
  4. Insider Trading: Trading a public company’s stock or other securities based on material, non-public information about the company, violating fair market practices as described in California Corporations Code § 25502.
  5. Failure to Supervise: Supervisors failing to adequately oversee the actions of brokers, leading to various forms of misconduct, which is addressed under California Corporations Code § 25216(c).

California Based Clients Should Contact Our Experienced Securities Fraud Lawyers Now

If you’ve been the victim of investment fraud, contact the securities fraud attorneys of Bakhtiari & Harrison for a free initial consultation. We represent victims of financial and investment disputes throughout California, including Los Angeles, San Diego, San Francisco, Palm Springs, and other locations, as well as clients in Nevada, Las Vegas, Utah, Arizona, Phoenix, and beyond. We will work tirelessly in pursuit of financial compensation for your investment losses.