Each state has its own securities laws. The following are selected sections of the Maine securities laws that are generally applicable in FINRA arbitrations.
SECTION 8. Dishonest and unethical practices
Broker-dealers and agents shall observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business and shall give particular consideration to any conflicts of interest that may arise or exist. The practices listed below are examples of practices that may be considered contrary to such standards and may thus constitute grounds for discipline under Section 16412 of the Act.
This section is not intended to be all inclusive, and thus practices not enumerated herein may also be deemed dishonest or unethical. This section is also not intended to limit or define fraudulent and other prohibited practices under Subchapter 5 of the Act or to preclude application of the general anti-fraud provisions contained therein against any person for practices similar in kind to those listed below.
For purposes of this section, the delivery of a prospectus, in and of itself, shall not be dispositive that the broker-dealer or agent provided the customer full and fair disclosure.
A person may be deemed to have engaged in “dishonest or unethical practices” under Section 16412(4)(M) of the Act if the person has engaged in practices including but not limited to one or more of the following:
1. Engaging in any unreasonable or unjustifiable delay or failure in executing orders, liquidating customer accounts, making delivery of securities purchased, or in paying upon request free credit balances reflecting completed transactions of any customer;
2. Switching or churning of securities in a customer’s account or inducing trading in a customer’s account which is excessive in size or frequency in view of the financial situation and needs of the customer and the character of the account;
3. Recommending to a customer the purchase, sale or exchange of any security without reasonable grounds to believe that such transaction or recommendation is suitable for the customer based upon reasonable inquiry concerning the customer’s other securities holdings, investment objectives, financial situation and needs, and any other relevant information known by the person;
If you have questions about a state securities law, The White Law Group may be able to help. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.