Stockbroker Fraud in California

Stockbrokers are highly educated individuals who have advanced and sophisticated knowledge about the stock market and the financial industry. Their clients, on the other hand, usually are not financial industry professionals and often rely completely upon their stockbroker’s superior knowledge. In scenarios like this, it is very easy for an unscrupulous stockbroker to take advantage of his or her clients (especially the elderly) and defraud them out of their hard-earned money. 

The California securities fraud lawyers at the Evans Law Firm have many years of experience representing the interests of the community against the financial services industry. We have pursued many unscrupulous stockbrokers and have a proven track record of obtaining successful outcomes for our clients. If you have suffered financial harm due to stockbroker fraud, you may be entitled to take action under California or federal law.

Protections for Victims of Stockbroker Fraud in California

Investors in California are protected by a network of federal and state laws that impose civil and criminal penalties on those who defraud them.

Federal Protections

Some of the most common stockbroker fraud laws at the federal level are the Securities Act of 1933 and the Securities Exchange Act of 1934. Under these statutes, prohibited conduct includes:

  • Employing any device, scheme, or artifact to defraud
  • Making an untrue statement of material fact or failing to state a material fact necessary to make the statement not misleading
  • Engaging in any act, practice, or business that would operate as a fraud or deceit upon any person

In order to prevail on a claim of stockbroker fraud, a plaintiff generally must show that their stockbroker made a misstatement upon which the plaintiff relied to his or her financial detriment.

State Protections

Investors are also protected against stockbroker fraud in California by state law. § 25401 of the California Corporations Code is very similar to federal law, stating:

It is unlawful for any person to offer or sell a security in this state or buy or offer to buy a security in this state by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

While these two schemes are very similar, readers should note that, unlike federal law, California does not require a defrauded investor to show that he or she relied upon a stockbroker’s statements. Thus, actions for stockbroker fraud in California based on California law are generally more plaintiff-friendly than their federal counterparts.

Contact the California Securities Fraud Lawyers at the Evans Law Firm

Federal and state law both look very disfavorably upon sophisticated stockbrokers who cause harm to their clients by taking advantage of their comparative ignorance. If you have been the victim of stockbroker fraud in California, you may be entitled to pursue a claim under federal or state law. For more information about stockbroker fraud in California, contact the Evans Law Firm online or by calling 415-441-8669.

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