Each state has its own securities laws. The following are selected sections of the Alabama securities laws that are generally applicable in FINRA arbitrations.
830-X-3-.12 Suitability Of Recommendations. Every dealer, investment adviser and every associated person thereof who recommends to a customer the purchase, sale or exchange of any security shall have reasonable grounds to believe and shall 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 dealer, investment adviser or associated person thereof.
830-X-3-.18 “Twisting” Or “Churning” Prohibited.
(1) No dealer, investment adviser, agent or investment adviser representative, or officer, partner, director, or agent of any thereof, shall effect or induce or attempt to induce any transaction in any insurance or securities portfolio of a prospective investor or customer for the purpose of sale or purchase of securities, mutual funds or insurance, or any other investment, by “twisting” or “churning.” “Twisting” and “churning” are prohibited and shall be grounds for revocation, suspension, denial, censure, bar, administrative assessment, fine or any other penalty that may be imposed by the Commission.
(2) “Twisting” shall mean the making of any false or misleading representation pertaining to, or any incomplete or fraudulent comparison with respect to, any life insurance policy, insurer, security, mutual fund, or other investment or issuer for the purpose of inducing or tending to induce any person to cash in or convert any security or to lapse, forfeit, surrender or terminate any life insurance policy and substitute any security therefor.
(3) “Churning” shall mean any action of a dealer, investment adviser, agent or investment adviser representative, or officer, partner, director or agent of any thereof, acting in its own interest and against the interest of its customer, which effects or induces transactions in the customer’s account which are excessive in size and frequency in the light of the nature of the account and the financial resources and investment needs and objectives of the customer.
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 https://whitesecuritieslaw.com.Tags: 830-x-3-.12, Alabama Securities Laws, Boca Raton, broker dealer, broker fraud, Chicago, churning, excessive trading, FINRA, Florida, Illinois, investment adviser, investment losses, investor protection, NASD, SEC, Securities Attorney, securities compliance, securities regulation, suitability, unethical practices Last modified: July 17, 2015