Securities lawyers work with investors and broker-dealers on a variety of investment matters. They are involved in litigation involving myriad issues, including insider trading, financial fraud, and other regulatory violations.
Most disputes between brokers and customers are handled through binding, pseudo-judicial arbitration hearings, much like a courtroom trial. These hearings require extensive research and preparation by the securities attorney.
Legal Advice
Securities lawyers are trained in the laws and regulations that govern financial investments. These specialists can help investors make sound investment decisions and protect them from securities fraud or other wrongdoing by brokers, financial professionals, or companies that fail to follow the law.
Most of a securities attorney’s work falls into two broad categories: transactional and regulatory. Transactional work focuses on the legal technicalities of securities issues, including initial public offerings, mergers and acquisitions, and private sales. These transactions require complex legal documents and careful attention to tax implications. Securities attorneys in this area frequently rely on paralegals to assist with the copious paperwork.
Regulatory work focuses more on compliance with the Securities and Exchange Commission (SEC) rules, blue sky laws (state securities regulations), and other federal and state financial industry oversight agencies. For example, a securities lawyer specializing in this area may represent brokerage firms and their brokers to the Financial Industry Regulatory Authority (FINRA). They may also be called upon to defend clients from allegations of violating the securities laws.
Litigation work primarily involves representing clients in disputes involving securities law violations or fraud claims by brokerage firms and financial professionals. These cases are usually handled nationally, so it is important to hire an attorney with extensive experience litigating securities cases.
Court Representation
After completing their law degree, most states require lawyers to pass a written bar exam. Those who want to practice securities law must pass the Securities and Exchange Commission’s (SEC) Multistate Bar Examination (MBE).
In addition to filing SEC complaints, securities attorneys often handle litigation between investors, brokerage firms, or stock brokers. These claims may involve investment losses caused by fraud, negligence, or mismanagement of an investor’s brokerage account. FINRA arbitration hearings are a common venue for these types of disputes.
A securities attorney also works with corporate clients on transactional matters like initial public offerings, private sales of securities, and mergers and acquisitions. They counsel these clients on sensitive disclosure and compliance issues, including insider trading governance policies.
Some of the most high-profile and rewarding cases that a securities attorney can take on are SEC investigations and FINRA arbitrations. These investigations are often highly complex, requiring a deep understanding of the law and how it applies to securities trading. An experienced securities lawyer can help a client deal with the pressures of an SEC investigation, such as by negotiating the scope of a subpoena or by working to settle the case before reaching a trial date. This helps reduce the impact on a company’s reputation and its shareholders.
Arbitration
In many cases, a dispute between an investor and a securities firm or broker is resolved through securities arbitration. This is a quicker and less burdensome alternative to traditional court litigation. As a result, attorneys specializing in this area often work on a contingency fee basis – meaning that investors only pay the attorney if they recover money for them.
A securities lawyer can also help a client conduct discovery in an arbitration, which is the process by which both parties gather information about the case. This can include depositions and document requests. In addition, a securities attorney can assist clients in hiring expert witnesses to testify in an arbitration.
Securities lawyers often work with corporate clients on various transactions and regulatory matters. For example, a securities lawyer can assist a corporation in preparing an initial public offering or negotiating a merger or acquisition. These matters require a thorough knowledge of the laws and regulations pertaining to securities sales. Securities attorneys can also help corporations develop best practices, address sensitive disclosure issues, and formulate compliance and governance policies. In addition, they may work with the Financial Industry Regulatory Authority or state securities regulators on regulatory investigations.
Research
Since the financial crisis of 2008, consumers have taken a keen interest in securities law. Securities lawyers help people get their money back from companies that engage in fraudulent practices or other wrongdoing. They may also assist individuals whom brokers or other investment professionals have harmed.
Securities attorneys are experienced in federal and state laws relating to the investment world. They work with clients who need assistance with mergers, acquisitions, and other financings, as well as with securities trading and compliance. Securities lawyers often spend much time on the phone or in client meetings. They are also involved in drafting documents, and conducting discovery and legal research.
If a brokerage firm or individual investor violates securities laws, a securities attorney can file an enforcement action with the SEC or another national regulatory body. They can also file a lawsuit with a court or an alternative dispute resolution forum like FINRA or a private arbitration forum. Securities lawyers can also defend individuals or firms that are the subject of fraud claims, class action lawsuits, and other litigation involving the financial industry. For example, if an employee at a publicly traded corporation learns about a merger and then trades shares of that company, they could be accused of insider trading. A securities lawyer could argue that the actions of this individual were not in good faith and protect them from prosecution.
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