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Since the 1990s, Malecki Law has been a boutique, Manhattan-based law firm, specializing in securities disputes. The firm’s experienced securities attorneys represent both retail investors and financial professionals against the world’s largest brokerage firms and financial institutions. Whether litigating in the courts or in FINRA arbitration, Malecki Law knows the landscape of the securities industry and has helped retail investors and retirees recover tens of millions of dollars caused by financial fraud or firm supervisory negligence. Malecki Law also represents financial professionals in employment disputes and Form U5 expungement matters to remove unjust customer complaints or defamatory comments placed by the employing financial firm. If you have received a subpoena from the SEC or FINRA (i.e., an 8210 request), Malecki Law also provides regulatory defense in representing individuals or businesses under investigation for insider trading or violation of other securities laws. Malecki Law can also help you respond to state regulatory subpoenas, including from State Corporation Commission, Division of Securities.
For investors, Virginia’s Division of Securities has prioritized awareness amongst Virginians about the increased investment risks associated with social isolation from the Coronavirus pandemic. The state maintains that this increased risk is owed mainly to home quarantines and the “increased reliance on the internet by isolated seniors for social interaction, shopping, electronic payments, banking and [online] scammers.” Investment fraud can happen to anyone, but it is no surprise that the state’s focus is on vulnerable groups like seniors. The alert further warned that the perpetrators of fraud may be strangers, but also highlighted a sometimes-forgotten culprit; the people we are closest to and whom we most trust. This includes family members, friends, and, of course, one’s own financial advisor.
The increased isolation is not just limited to investors, but also to financial advisors and other employees who have been working from remote home offices. This has the potential to compound the risks to investors even further because the industry still has rules that require all firms to supervise their financial advisers, now made more difficult with so many more advisers working from home. Meanwhile, not all firms are likely to have had the necessary infrastructure in place to support proper supervision of remote offices on such a mass scale.
FINRA Rule 3110 requires that each member firm “shall establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules.” Both the SEC and FINRA require brokerage firms to supervise the outside business activities of their financial professionals in remote, branch offices to the same standard as what is required at a main, central office. See, for example, FINRA Notice to Members (NTM) 01-79. This has typically been the basis for Malecki Law bringing negligence claims against firms that failed to closely monitor a financial adviser who later turned out to be selling fake investments as part of a Ponzi scheme. Remote offices necessarily require firms to maintain a closer level of supervision, so like the Virginia Division of Securities, we agree that increased isolation from the pandemic presents an increased risks to investors.
If you are an investor who has lost money in the stock market during the pandemic, whether due to fraud or negligence, you should contact Malecki Law’s securities fraud attorneys for a free consultation. Similarly, if you are an industry professional, responding to regulatory subpoenas is complex and can be an expensive undertaking, so it can be tempting to try to handle such matters without an attorney. However, it is important to hire a securities attorney who is knowledgeable about the securities laws and familiar with the different regulators and what each might be looking for. Regulators typically share information and cooperate with one another behind the scenes. A statement made to one regulator may not create criminal liability, but that regulator can still report you to the criminal authorities, which can lead to a second subpoena and only make matters worse. No matter what state you live in, Malecki Law follows all rules to ensure you are properly represented in your home state. Many of our clients choose a contingency arrangement where we do not get paid unless you do.'