If an individual investor has a dispute with a FINRA brokerage firm or stock broker, he/she most likely will have to arbitrate through FINRA's Dispute Resolution system. FINRA Arbitration holds arbitration hearings in one Maryland city: Baltimore, Maryland. D.C. Metro area Maryland residents may also request a hearing in Washington, D.C.
The Securities Fraud Lawyers at Greco & Greco, P.C. regularly represent Maryland residents in disputes with their financial advisors and securities salespersons, involving claims of suitability, violations of FINRA Rules, negligence, fraud, misrepresentation, ponzi schemes, breach of fiduciary duty, professional malpractice, and other claims. Please contact Scott Greco for a free attorney consultation about your case. We serve clients from all areas of Maryland, including Baltimore, Columbia, Germantown, Silver Spring, Waldorf, Ellicott City, Frederick, Rockville, Gathersburg, Bethesda, Hagerstown, Annapolis, Cumberland, Montgomery County, and Prince George's County.
The Maryland Attorney General, Securities Division, in Baltimore, Maryland, regulates the sales of securities in the state of Maryland. Its website provides information on state securities Statutes and Rules, and information on how to file a complaint.
Maryland's Securities Act is similar to many states' Acts with regard to providing for civil liability for the commission of securities fraud in the sale of securities (including untrue statements of material fact or omissions of material fact). The statute provides for rescission (or damages if the investor no longer owns the security), reasonable attorney's fees, and interest.
Common Legal Claims by investors against their financial advisors in Maryland are:
A. Suitability. Prior to recommending the purchase of specific investments or a specific investment strategy to a customer, a stock broker is required to determine that the investments are suitable to that particular investor. A suitability determination is based upon many different factors such as age, investment objectives, risk tolerance, employment situation, needs, income, assets, and investment experience. If an advisor’s recommendations of unsuitable investments result in the investor incurring significant losses, that investor may have a suitability claim against the broker and his/her firm.
B. Churning. Churning occurs when a broker exercises control over an account and allows the broker's interest in making commissions to override the investor's interests in the account. When a broker makes a buy or sell recommendation for an account, that broker should have the investor's best interests based on their investment objectives in mind. If the broker makes excessive buy and sell recommendations for the purposes of generating commissions for the broker by each buy and sell, that broker is engaged in churning the account. Excessive turnover in the assets of the account and/or a high cost to equity percentage are often a sign of churning.
C. Unauthorized Trading. Generally, an investor can have two kinds of an account, non-discretionary and discretionary. In a typical non-discretionary account, the broker must consult with and obtain the consent of the customer prior to making a trade in the account. Unauthorized trading occurs when a broker makes trades in a non-discretionary account without the consent of the customer.
D. Securities Fraud. Most of the claims in this list are subsets of securities fraud which is employing a device, scheme, or artifice to defraud, or obtaining money by means of untrue statements of material facts and failure to state material facts in violation of state blue sky / securities laws or federal law (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5). If a broker makes false statements to an investor or fails to advise the investor of certain important facts, the investor may be able to recover losses incurred resulting from this fraud.
E. Margin Disputes. Margin trading involves borrowing money from the brokerage firm to purchase securities greater in value than the equity in an investor's account. Due to the risky nature of trading on the margin, disputes with brokers often arise as a result of significant losses. If a broker trades on the margin without the knowledge or consent of the investor, the investor may be able to recover the losses resulting from the fraud.
F. Ponzi Scheme Investment Scams. Ponzi schemes generally involve promises of high returns by salespersons over short periods of time, but in reality result in stealing from Peter to pay Paul. Because returns to investors in ponzi schemes are often paid out of new investment monies from new investors, the scheme will ultimately fall apart when the new investors dry up, leaving all investors often holding a worthless investment. Financial Advisors and their brokerage firms who sell ponzi scheme fraudulent investments may be found liable for selling unsuitable investments, securities fraud, sale of unregistered securities, failure to supervise, and other legal violations.
G. Failure to Supervise Broker. FINRA firms have a duty to supervise their registered brokers, and their failure to do so may form the basis of various legal claims against them. FINRA Rule 3110 states: Each member shall establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA Rules. Final responsibility for proper supervision shall rest with the member.
Examples of legal grounds for liability of Broker-Dealers in these situations include:
a) under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;
b) a broker's Broker-Dealer can also be found liable as a control person of that broker under state and federal securities laws; and
c) claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, and outside business activities.
Obviously, this list is by no means comprehensive and all of the legal requirements of the above claims stated are not completely set out. This web site is not intended to give legal advice or create an attorney-client relationship. Please contact our securities lawyers for a free consultation if you believe your financial advisor broker may be liable under one of the above claims, or for other wrongful conduct.
The Civil Liability section of the Maryland Securities Act is as follows:
Md. Corporations and Associations Code Ǡ11-703. Civil liabilities
(a) When seller, purchaser or advisor liable. --
(1) A person is civilly liable to the person buying a security from him if he:
(i) Offers or sells the security in violation of Ǡ11-304(b), Ǡ11-401(a), Ǡ11-402(a), or Ǡ11-501 of this title, or of any rule or order under Ǡ11-205 of this title which requires the affirmative approval of sales literature before it is used; or
(ii) Offers or sells the security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, the buyer not knowing of the untruth or omission, and if he does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.
(2) A person is civilly liable to the person selling a security to him if he offers to purchase or purchases the security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading, the seller not knowing of the untruth or omission, and if he does not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.
(3) A person is civilly liable to another person if the person:
(i) Acts as an investment adviser or representative in violation of Ǡ11-302(c), Ǡ11-401(b), Ǡ11-402(b), or Ǎ 11-304(b) of this title or any rule or order promulgated under it, except that an action based on a violation of Ǡ11-402(b) of this title may not be maintained except by those persons who directly received advice from the unregistered investment adviser representative; or
(ii) Receives, directly or indirectly, any consideration from another person for advice as to the value of securities or their purchase or sale or for acting as an investment adviser or representative under Ǡ11-101(h) and (i) of this title, whether through the issuance of analyses, reports, or otherwise, and employs any device, scheme, or artifice to defraud such other person or engages in any act, practice or course of business which operates or would operate as a fraud or deceit on such other person.
(b) Extent of liability. --
(1) A buyer may sue either at law or in equity:
(i) On tender of the security, to recover the consideration paid for the security, together with interest at the rate provided for in Ǡ11-107(a) of the Courts and Judicial Proceedings Article, as amended, from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security; or
(ii) If he no longer owns the security, for damages.
(2) A seller may sue either at law or in equity:
(i) On tender of the consideration paid for the security, to recover the security, together with the amount of any income received on the security, costs, and reasonable attorneys' fees; or
(ii) If the buyer no longer owns the security, for damages.
(3) For the purposes of subsection (b)(1)(ii) of this section, damages are the amount that would be recoverable on a tender less the value of the security when the buyer disposed of it and interest at the rate provided for in Ǡ11-107(a) of the Courts and Judicial Proceedings Article, as amended, from the date of disposition.
(4) (i) In any action brought under subsection (a)(3) of this section a person may sue either at law or in equity for the rescission of the advisory contract and any damages resulting from the violation, together with interest at the rate provided for in Ǡ11-107(a) of the Courts and Judicial Proceedings Article, as amended, from the date of payment of the consideration, costs, and reasonable attorneys' fees, less the amount of any income received from such advice.
(ii) An action based on a violation of Ǡ11-302(c) of this title may not prevail where the person accused of the violation sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.
(c) Others jointly and severally liable with seller or purchaser. --
(1) Every person who directly or indirectly controls a person liable under subsection (a) of this section, every partner, officer, or director of the person liable, every person occupying a similar status or performing similar functions, every employee of the person liable who materially aids in the conduct giving rise to the liability, and every broker-dealer or agent who materially aids in such conduct are also liable jointly and severally with and to the same extent as the person liable, unless able to sustain the burden of proof that he did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist.
(2) There is contribution as in cases of contract among the several persons so liable.
(d) Time of making tender. -- Any tender specified in this section may be made at any time before entry of judgment.
(e) Survival of cause of action. -- Every cause of action under this statute survives the death of any person who might have been a plaintiff or defendant.
(f) Limitation of actions; effect of offer of refund. --
(1) A person may not sue under subsections (a)(1) and (2) of this section after the earlier to occur of 3 years after the contract of sale or purchase or the time specified in paragraph (2) of this subsection.
(2) An action may not be maintained:
(i) To enforce any liability created under subsection (a)(1)(i) of this section, unless brought within one year after the violation on which it is based; or
(ii) To enforce any liability created under subsection (a)(1)(ii) or (2) of this section, unless brought within one year after the discovery of the untrue statement or omission, or after the discovery should have been made by the exercise of reasonable diligence.
(3) A person may not sue under subsection (a)(3) of this section more than 3 years after the date of the advisory contract or the rendering of investment advice, or the expiration of 2 years after the discovery of the facts constituting the violation, whichever first occurs.
(4) A person may not sue under this section:
(i) If the buyer received a written offer, before suit and at a time when he owned the security or asset, to refund the consideration paid together with interest at the rate provided for in Ǡ11-107(a) of the Courts and Judicial Proceedings Article, as amended, from the date of payment, less the amount of any income received on the security or asset, and he failed to accept the offer within 30 days of its receipt;
(ii) If the buyer received the offer before suit and at a time when he did not own the security or asset, unless he rejected the offer in writing within 30 days of its receipt; or
(iii) If the seller received a written offer from the buyer, before suit, to return the security or asset, together with the amount of any income received on the security, less interest at the rate provided for in Ǡ11-107(a) of the Courts and Judicial Proceedings Article, as amended, from the date of payment, and he failed to accept the offer within 30 days of its receipt.
(g) Effect of making or performing contract with knowledge of facts. -- A person may not base any suit on any contract if he:
(1) Has made or engaged in the performance of the contract in violation of any provision of this title or any rule or order under this title; or
(2) Has acquired any purported right under the contract with knowledge of the facts by reason of which its making or performance was in violation.
(h) Provision for waiver of compliance with section void. -- Any condition, stipulation, or provision binding any person acquiring any security or asset or receiving any investment advice to waive compliance with any provision of this title or any rule or order under this title is void.
(i) Rights and remedies additional to others. -- The rights and remedies provided by this title are in addition to any other rights or remedies that may exist at law or in equity, but this title does not create any cause of action not specified in this section or Ǡ11-410 of this title.
FINRA securities brokerage firms with their main offices in Maryland:
ARONSON CAPITAL ADVISORS, LLC
805 KING FARM BOULEVARD, SUITE 300, ROCKVILLE, MD 20850
ATLANTIC SECURITIES, INC.
920 PROVIDENCE RD., SUITE 201, TOWSON, MD 21286-2988
BELLAMAH, NEUHAUSER & BARRETT, INC.
8730 GEORGIA AVENUE, SUITE 500, SILVER SPRING, MD 20910-3648
BENGUR BRYAN & CO., INC.
509 SOUTH EXETER STREET, SUITE 210, BALTIMORE, MD 21202
BLUE SAND SECURITIES LLC
610 PROFESSIONAL DR., STE 275, GAITHERSBURG, MD 20879
BROADOAK PARTNERS, LLC
7201 WISCONSIN AVENUE, SUITE 630, BETHESDA, MD 20814
BROWN ADVISORY SECURITIES, LLC
901 SOUTH BOND STREET, SUITE 400, BALTIMORE, MD 21231-3340
Mailing Address: 901 SOUTH BOND STREET, SUITE 400, BALTIMORE, MD 21231
C. G. MENK & ASSOCIATES, INC.
7502 CONNELLEY DRIVE, SUITE 104, HANOVER, MD 21076
CALVERT INVESTMENT DISTRIBUTORS, INC.
4550 MONTGOMERY AVENUE - SUITE 1000N, BETHESDA, MD 20814
CAMPBELL FINANCIAL SERVICES, INC.
2850 QUARRY LAKE DRIVE, BALTIMORE, MD 21209
CAPITAL PORTFOLIO MANAGEMENT, INC.
2205 YORK ROAD, SUITE 203, TIMONIUM, MD 21093
CEROS FINANCIAL SERVICES, INC.
1445 RESEARCH BOULEVARD, SUITE 530, ROCKVILLE, MD 20850
CFG CAPITAL MARKETS, LLC
1422 CLARKVIEW ROAD, 5TH FLOOR, BALTIMORE, MD 21209
2 VILLAGE SQUARE, SUITE 200, BALTIMORE, MD 21210
CHESSIECAP SECURITIES, INC.
7911 SHERWOOD AVENUE, TOWSON, MD 21204
Mailing Address: 3 BETHESDA METRO CENTER, SUITE 700, BETHESDA, MD 20814
EAGLE EQUITIES, INC.
400 CRAIN HIGHWAY S.W., GLEN BURNIE, MD 21061-3645
Mailing Address: 400 CRAIN HWY S.W., GLEN BURNIE, MD 21061
ENTERPRISE EQUITIES, INC.
10227 WINCOPIN CIRCLE, SUITE 800, COLUMBIA, MD 21044
FELLS POINT RESEARCH LLC
600 WYNDHURST AVENUE, SUITE 300, BALTIMORE, MD 21210
FIFTH THIRD SECURITIES, INC.
34 FOUNTAIN SQUARE PLAZA, MD 10AT5G, CINCINNATI, OH 45202
Mailing Address: 38 FOUNTAIN SQUARE PLAZA, MD 10AT5G, CINCINNATI, OH 45263
FIRST INTERNET SECURITIES NETWORK
4800 MONTGOMERY LANE, BETHESDA, MD 20814
FORTIGENT SECURITIES COMPANY, LLC.
2600 TOWER OAKS BLVD, SUITE 300, ROCKVILLE, MD 20852-3103
FOUNDERS FINANCIAL SECURITIES LLC
1020 CROMWELL BRIDGE ROAD, TOWSON, MD 21286
FRS SECURITIES, LLC
1110 BONIFANT STREET, SUITE 301, SILVER SPRING, MD 20910
GLOBAL BROKERAGE SERVICES, INC.
11350 MCCORMICK RD., EP III SUITE 901, HUNT VALLEY, MD 21031
H. BECK, INC.
11140 ROCKVILLE PIKE, SUITE 400, ROCKVILLE, MD 20852
Mailing Address: 11140 ROCKVILLE PIKE-400, ROCKVILLE, MD 20852
HANNON ARMSTRONG SECURITIES, LLC
1997 ANNAPOLIS EXCHANGE PARKWAY, SUITE 520, ANNAPOLIS, MD 21401
HARBOR INVESTMENT ADVISORY, LLC
100 LIGHT STREET, SUITE 1300, BALTIMORE, MD 21202
HIGHBANK SECURITIES LLC
1 SOUTH STREET, SUITE 860, BALTIMORE, MD 21202
HOLLOWAY & ASSOCIATES, INC.
ONE MILL PLACE, STE 101, EASTON, MD 21601
Mailing Address: P.O. BOX 1559, EASTON, MD 21601
INNOVA SECURITIES, INC.
3703 WOODSMAN COURT, SUITLAND, MD 20746-1376
INTERNATIONAL MONEY MANAGEMENT GROUP, INC.
110 CHANNEL MARKER WAY SUITE #101, GRASONVILLE, MD 21638
INVESTORS PROPERTIES, INC.
3724 THOMAS POINT RD., ANNAPOLIS, MD 21403
Mailing Address: PO BOX 4220, ANNAPOLIS, MD 21403
JACQUES FINANCIAL, LLC
15430 AVERY ROAD, ROCKVILLE, MD 20855
JSI TRANSACTION ADVISORS, LLC
7852 WALKER DRIVE, STE. 200, GREENBELT, MD 20770
KOONCE SECURITIES, INC.
6550 ROCK SPRING DR. STE 600, BETHESDA, MD 20817-6550
LAFAYETTE INVESTMENTS, INC.
7910 WOODMONT AVE, SUITE 905, BETHESDA, MD 20814
LEGG MASON INVESTOR SERVICES, LLC
100 INTERNATIONAL DRIVE, BALTIMORE, MD 21202
LOMBARD SECURITIES INCORPORATED
1820 LANCASTER STREET, SECOND FLOOR, BALTIMORE, MD 21231
Mailing Address: 1820 LANCASTER STREET, BALTIMORE, MD 21231
MAP SECURITIES, INC.
1682 E. GUDE DRIVE - SUITE 201, ROCKVILLE, MD 20850
MORGAN STANLEY & CO. LLC
1585 BROADWAY, NEW YORK, NY 10036-8293
Mailing Address: 1300 THAMES STREET WHARF, 6TH FLOOR, C/O NORTH AMERICAN REGISTRATION, BALTIMORE, MD 21231
MORGAN STANLEY SMITH BARNEY
2000 WESTCHESTER AVENUE, PURCHASE, NY 10577-2530
Mailing Address: 1300 THAMES STREET, 6TH FLOOR, BALTIMORE, MD 21231
MS SECURITIES SERVICES INC.
1585 BROADWAY, NEW YORK, NY 10036-8293
Mailing Address: NORTH AMERICAN REGISTRATION, 1300 THAMES STREET, 6TH FLOOR, BALTIMORE, MD 21231
NC SECURITIES, LLC
3 BETHESDA METRO CENTER, SUITE 500, BETHESDA, MD 20814
OFFUTT SECURITIES, INC.
3515 BUTLER ROAD, GLYNDON, MD 21071
Mailing Address: P.O. BOX 559, COCKEYSVILLE, MD 21030
PARCHMAN, VAUGHAN & COMPANY, L.L.C.
1040 PARK AVENUE, SUITE 120, BALTIMORE, MD 21201
PERCIVAL FINANCIAL PARTNERS, LTD.
2 VILLAGE SQ., SUITE 252, BALTIMORE, MD 21210
POTOMAC CAPITAL MARKETS, LLC
5 SOUTH MARKET STREET, 4TH FLOOR, FREDERICK, MD 21701
POTOMAC INVESTMENT COMPANY
5600 WISCONSIN AVE #108, CHEVY CHASE, MD 20815
PRIME DEALER SERVICES CORP.
1221 AVENUE OF THE AMERICAS, NEW YORK, NY 10020
Mailing Address: NORTH AMERICAN REGISTRATION, 1300 THAMES STREET, 6TH FLOOR, BALTIMORE, MD 21231
PROFUNDS DISTRIBUTORS, INC.
7501 WISCONSIN AVE., SUITE 1000, BETHESDA, MD 20814
Mailing Address: 7501 WISCONSIN AVE., SUITE 1000, EAST TOWER, BETHESDA, MD 20814
PSA EQUITIES, INC.
11311 MCCORMICK ROAD, HUNT VALLEY, MD 21031-8622
RYDEX DISTRIBUTORS, LLC
805 KING FARM BLVD. STE 600, ROCKVILLE, MD 20850
SHELYN SECURITIES CORP
12250 ROCKVILLE PIKE, STE. 200, ROCKVILLE, MD 20852
SIGNAL HILL CAPITAL GROUP LLC
300 E. LOMBARD STREET, SUITE 1700, BALTIMORE, MD 21202-3243
STEBEN & COMPANY, INC.
2099 GAITHER ROAD, STE. 200, ROCKVILLE, MD 20850
Mailing Address: 2099 GAITHER ROAD, STE. 200, ROCKVILLE, MD 20850
STOUT CAUSEY CAPITAL CORPORATION
910 RIDGEBROOK ROAD, SPARKS, MD 21152
T. ROWE PRICE INVESTMENT SERVICES, INC.
100 E PRATT ST, BALTIMORE, MD 21202
TLS FINANCIAL SERVICES, INC.
920 PROVIDENCE RD, SUITE 203, TOWSON, MD 21286-2977
WASHINGTON SECURITIES CORPORATION
6935 WISCONSIN AVE NO. 510, CHEVY CHASE, MD 20815-6113