State of Maine Investment Fraud Lawyer

A common misconception is that only the gullible fall for an investment fraud, but this could not be further from the truth. In its pamphlet Fighting Fraud 101- Smart Tips for Older Investors, the State of Maine’s Office of Securities highlights the targeting of older Americans by fraudsters by listing the qualities typical investment fraud victims, including:

• Self-reliant when it comes to making decisions;
• Above-average financial knowledge;
• College-educated;
• Optimistic; and
• Open to listening to new ideas or sales pitches.

You are not alone if you believe the above qualities are also characteristic of a careful, prudent investor! Research on financial fraud victims bears this out, going back to a 2006 Investor Fraud study that found that financial fraud victims are, counter to the stereotype, more financially literate than non-victims, and also tend to be men with higher levels of income than non-victims. Anyone can become a victim of fraud, despite defense lawyers frequently, and often unsuccessfully, resorting to “sophistication” arguments as an attempt to blame the victim investor. While blaming the victim holds some appeal on psychological grounds, it does not hold much water on a legal basis. Federal and state securities laws are, in fact, typically drafted with no mention of a victim’s sophistication. This is because the securities laws are intended for everyone’s protection – anyone can be lied to. With this information in hand, retirees and investors from Maine should know they are not alone if they have been victimized by financial fraud. The investment fraud lawyers at Malecki Law have successfully recovered tens of millions of dollars for fraud victims, and for sophisticated and non-sophisticated investors alike.

As securities fraud can happen to anyone, it is important to hire the right counsel to recover investments lost due to fraud and even financial firm negligence in failing to supervise accounts to stop a preventable fraud. Sometimes fraudsters can even go undetected in their crimes within a financial firm, finding legitimate cover within the organization and in a position of trust, which is how many Ponzi schemes occur. Financial firms have a duty to supervise their employees, even for outside business activities that are conducted away from the firm.

Further, relying on a securities regulator to get your money back is often a prolonged waste of time. While enforcement actions by FINRA and the SEC are welcome, they are often unsuccessful in making a victim whole. Firms that are lackadaisical around supervision and compliance will often treat the industry rules as speed limits that are made to be broken, and which the firm concedes that they will pay the equivalent of a “speeding ticket” penalty as the cost of doing business.

This certainly seems to be the case in Maine, where the Office of Securities, the state securities regulator, appears to have engaged in recent enforcement actions for “minor” licensing issues against larger firms, requiring them to pay a fine so small that there is no plausible intention by the regulator to deter against future infractions. In 2021 alone, Main’s Office of Securities brought four enforcement actions against large firms – LPL Financial, Voya Financial, UBS Financial, and Janney Montgomery Scott – that all resulted in settlements and civil fines of $2,500 for various regulatory infractions, which included violations of not only employing an advisor without a state license, but also, in the case of Janney Montgomery Scott, for failing to even respond to the regulator and its reminder notices to disclose when the firm last conducted an on-site inspection of its branch office in Maine. $2,500 for ignoring your regulator.

Maine has its own state securities or “blue sky” laws aside from the federal securities laws. For example, Maine has requirements for licensure of broker-dealers. Section 16041 states that a person shall not transact business in Maine as a broker-dealer unless that person meets certain exemptions. In the context of fraud, Maine’s law states that it is unlawful for a person who advises others for compensation, either directly or indirectly, or through publications or writings to employ a device of scheme or artifice to defraud another person. There is a plethora of other blue sky laws in the Maine Uniform Securities Act. These laws are very similar to the federal laws. Both the federal and Maine blue sky laws apply to those conducting in the state of Maine.

If a firm is going to ignore a regulator, they will certainly ignore a customer who reports fraud within a firm account. To the extent that a regulator does take a more a more active role to deter financial crime, investors should keep in mind that regulatory investigations do not always seek to prosecute the full time over which the violations occurred. This means victims expecting restitution may only receive a small fraction of their losses from a victim fund, even after years of investigation. This is why it is critical for investors who have been victimized by financial fraud to additionally seek counsel from securities fraud attorneys and an experienced investment loss recovery law firm to pursue a parallel civil lawsuit against the financial institution. In FINRA Arbitration – the forum where most retail investors are required to bring their dispute (i.e., not court) – investors can expect their cases to be resolved within 12 to 15 months depending on the availability of arbitrators and the parties’ counsel. Elderly and disabled investors may additionally qualify for expedited proceedings, which can bring a resolution several months faster. This is far faster than what investors can typically expect from a regulatory enforcement proceeding, which in some cases never reaches a conclusion.

Malecki Law is a national securities fraud law firm that has recovered tens of millions of dollars for investors from large financial firms, such as LPL, UBS, Morgan Stanley, and many others. Hiring knowledgeable, investment loss recovery lawyers is the first step towards recovering investment money lost to fraud or negligent firm supervision. If you are a resident in the state of Maine who has lost money in the financial markets, contact the investment fraud lawyers at Malecki Law for a free consultation.