Each state has its own securities laws. The following are selected sections of the Oregon securities laws that are generally applicable in FINRA arbitrations.
Suitability of Recommendations
It shall constitute a “Fraudulent, Deceptive, or Manipulative Act or Practice,” as used in these rules, for any broker-dealer or associated person to recommend to a customer the purchase, sale, or exchange of any security, unless such broker-dealer or associated person shall have reasonable grounds to believe that the recommendation is suitable for such customer on the basis of information furnished by such customer after reasonable inquiry concerning the customer’s investment objectives, financial situation and needs and any other information known by such broker-dealer or associated person.
Unethical Business Practices of State Investment Advisers and Their Investment Adviser Representatives
(1) A person who is a State Investment Adviser or an Investment Adviser Representative for a State Investment Adviser is a fiduciary and has a duty to act primarily for the benefit of the Adviser’s clients. The provisions of this rule apply to state investment advisers and their investment adviser representatives. While the extent and nature of this duty varies according to the nature of the relationship between an investment adviser and its clients and the circumstances of each case, a state investment adviser or its investment adviser representatives shall not engage in unethical business practices, including the following:
(c) Inducing trading in a client’s account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account if that adviser in such situations can directly benefit from the number of securities transactions effected in a client’s account.
§ 403.010. Prohibited transactions and practices.
(b) Each broker-dealer or agent who recommends to a customer the purchase, sale or exchange of any security shall have reasonable grounds to believe that the recommendation is not unsuitable for such customer on the basis of information furnished by such customer after reasonable inquiry concerning the customer’s investment objectives, financial situation and needs, and any other information known by or made available to such broker-dealer or agent.
(1) Any act of a broker-dealer or agent designed to effect with or for the account of any customer who is not an institutional investor as defined in these regulations with respect to which such broker-dealer or agent is vested with any discretionary power or authority or with respect to which such broker-dealer or agent is able by reason of the trust and confidence of the customer and confidence to influence the volume and frequency of the trades, any transactions of purchase or sale which are excessive in size or frequency in view of the financial resources and character of such account. This subsection shall not be applicable to customer limit orders for the purchase or sale of securities.
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.