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 Nashville, Tennessee and Memphis, Tennessee.
The Securities Fraud Lawyers at Greco & Greco, P.C. represent Tennessee 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 Tennessee including Nashville, Memphis, Knoxville, Chattanooga, Clarksville, Murfreesboro, Franklin, Jackson, Johnason City, Bartlett, and Hendersonville.
The Tennessee Department of Commerce and Insurance, Securities Division, in Nashville, Tennessee regulates the sales of securities in the state of Tennessee. Its websiteprovides information on consumer protection, state securities Statutes and Rules, and other securities resources.
Tennessee's Uniform 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) and interest.
Common Legal Claims by investors against their financial advisors in Tennessee 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.
Tennessee Code Ǡ48-2-122 Civil Liabilities:
(a) (1) Any person who:
(A) Sells a security in violation of ǧ 48-2-104 -- 48-2-109, 48-2-110(f), or of any condition imposed under Ǡ48-2-107(f), or any rule, or order under this part of which the person has notice; or
(B) Sells a security in violation of Ǡ48-2-121(a) (the purchaser not knowing of the violation of Ǡ48-2-121(a), and who does not carry the burden of proof of showing that the person did not know and in the exercise of reasonable care could not have known of the violation of Ǡ48-2-121(a)); shall be liable to the person purchasing the security from the seller to recover the consideration paid for the security, together with interest at the legal rate from the date of payment, less the amount of any income received on the security, upon the tender of the security, or, if the purchaser no longer owns the security, the amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it and interest at the legal rate from the date of disposition.
(2) Tender shall require only notice of willingness to exchange the security for the amount specified.
(3) Any notice may be given by service as in civil actions or by certified mail addressed to the last known address of the person liable.
(b) (1) Any person who purchases a security in violation of Ǡ48-2-121(a) (the seller not knowing of the violation of Ǎ 48-2-121(a), and who does not carry the burden of proof of showing that the purchaser did not know and in the exercise of reasonable care could not have known of the violation of Ǡ48-2-121(a)) shall be liable to the person selling the security to the purchaser to return the security, plus any income received by the purchaser thereon, upon tender of the consideration received, or, if the purchaser no longer owns the security, the excess of the value of the security when the purchaser no longer owns the security, the excess of the value of the security when the purchaser disposed of it, plus interest at the legal rate from the date of disposition, over the consideration paid for the security.
(2) Tender requires only notice of willingness to pay the amount specified in exchange for the security.
(3) Any notice may be given by service as in civil actions or by certified mail to the last known address of the person liable.
(c) (1) Any person who willfully engages in any act or conduct which violates Ǡ48-2-121 shall be liable to any other person (not knowing that any such conduct constituted a violation of Ǡ48-2-121) who purchases or sells any security at a price which was affected by the act or conduct for the damages sustained as a result of such act or conduct unless the person sued shall prove that the person sued acted in good faith and did not know, and in the exercise of reasonable care could not have known, that such act or conduct violated Ǡ48-2-121.
(2) Damages shall be the difference between the price at which the other person purchased or sold securities and the market value which the securities would have had at the time of the other person's purchase or sale in the absence of the act or conduct plus interest at the legal rate.
(d) Any person who shall make or cause to be made any statement in any application, report, or document filed pursuant to this part or any rule or order hereunder or any undertaking contained in a registration statement hereunder, or in any advice given in such person's capacity as an investment adviser, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, shall be liable to any person (not knowing that any such statement was false or misleading) who, in reliance upon such statement, shall have purchased or sold a security at a price which was affected by such statement, for damages (calculated as provided in subsections (a) and (b)) caused by such reliance, unless the person sued shall prove that the person sued acted in good faith and had no knowledge that such statement was false or misleading and in the exercise of reasonable care could not have known that such statement was false or misleading.
(e) A person seeking to enforce any liability under this section may sue either at law or in equity in any court of competent jurisdiction.
(f) In any such suit under this section, the court may, in its discretion, require an undertaking for the payment of the costs of such suit, and assess reasonable costs, including reasonable attorneys' fees, against either party litigant.
(g) Every person who directly or indirectly controls a person liable under this section, every partner, principal executive officer, or director of such person, every person occupying a similar status or performing similar functions, every employee of such person who materially aids in the act or transaction constituting the violation, and every broker-dealer or agent who materially aids in the act or transaction constituting the violation, are also liable jointly and severally with and to the same extent as such person, unless the person who would be liable under this subsection (g) proves that the person who would be liable 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. There is contribution as in cases of contract among the several persons so liable.
(h) No action shall be maintained under this section unless commenced before the expiration of five (5) years after the act or transaction constituting the violation or the expiration of two (2) years after the discovery of the facts constituting the violation, or after such discovery should have been made by the exercise of reasonable diligence, whichever first expires.
(i) Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this part or any rule or order hereunder is void.
(j) The rights and remedies under this part are in addition to any other rights or remedies that may exist at law or in equity.
(k) The legal rate of interest shall be that as provided by Ǡ47-14-121.
FINRA securities brokerage firms with their main offices in Tennessee:
AARON CAPITAL, INCORPORATED
5180 PARK, SUITE 130, MEMPHIS, TN 38119
ADVANCED ASSET TRADING, INC
5050 POPLAR AVE, SUITE 528, MEMPHIS, TN 38157
Mailing Address: 5050 POPLAR AVE NO.528, MEMPHIS, TN 38157
ALLUVION SECURITIES, LLC
5101 WHEELIS DRIVE, SUITE 200, MEMPHIS, TN 38117
AVONDALE PARTNERS, LLC
3102 WEST END AVENUE, SUITE 1100, NASHVILLE, TN 37203
Mailing Address: 3102 WEST END AVE, SUITE 1100, NASHVILLE, TN 37203
BRANDON INVESTMENTS, INC.
5101 WHEELIS ROAD, SUITE 112, MEMPHIS, TN 38117
Mailing Address: P O BOX 770870, MEMPHIS, TN 38177-0870
BRIGHTCHOICE FINANCIAL, LLC
618 CHURCH STREET, SUITE 430, NASHVILLE, TN 37219
BROWN ASSOCIATES, INC.
819 BROAD STREET, CHATTANOOGA, TN 37402-2613
Mailing Address: P.O. BOX 11507, CHATTANOOGA, TN 37401-2507
CAPWEALTH INVESTMENT SERVICES, LLC
3000 MERIDIAN BLVD, SUITE 250, FRANKLIN, TN 37067
CARTY & COMPANY, INC.
6263 POPLAR AVENUE, SUITE 800, MEMPHIS, TN 38119
Mailing Address: P.O. BOX 17527, MEMPHIS, TN 38187-0527
CENTER STREET SECURITIES, INC.
26 CENTURY BLVD., SUITE 301, NASHVILLE, TN 37214
CHICKASAW SECURITIES, LLC
6075 POPLAR AVENUE, SUITE 402, MEMPHIS, TN 38119
COMMERCE SQUARE TRADING, LLC
6075 POPLAR AVENUE - CRESCENT CENTER, SUITE 700, MEMPHIS, TN 38119
Mailing Address: 6075 POPLAR - CRESCENT CENTER, SUITE 700, MEMPHIS, TN 38119
CURTISWOOD CAPITAL, LLC
104 WOODMONT BLVD, SUITE 200, NASHVILLE, TN 37205
CW SECURITIES, LLC
8848 CEDAR SPRINGS LANE, SUITE 201, KNOXVILLE, TN 37923
DEARBORN CAPITAL MARKETS GROUP, LLC
3065 EAST CORPORATE EDGE DRIVE, SUITE 101, GERMANTOWN, TN 38138
DECOSIMO CORPORATE FINANCE, LLC
SUITE 902, TALLAN FINANCIAL CENTER, CHATTANOOGA, TN 37402
6750 POPLAR A VENUE - SUITE 300, MEMPHIS (SHELBY), TN 38138-7424
Mailing Address: 6750 POPLAR AVENUE - SUIITE 300, MEMPHIS (SHELBY), TN 38138-7424
ENERGY SECURITIES, INC.
1612 WESTGATE CIRCLE, SUITE 120, BRENTWOOD, TN 37027
Mailing Address: 1612 WESTGATE CIRLCE, SUITE 120, BRENTWOOD, TN 37027
EXTENSION ADVISORS, LLC
4015 HILLSBORO PIKE, SUITE 214, NASHVILLE, TN 37215
FIRST CITIZENS FINANCIAL PLUS, INC.
2017 ST. JOHN AVE. SUITE A, DYERSBURG, TN 38024
Mailing Address: PO BOX 370, DYERSBURG, TN 38025-0370
FIRST TENNESSEE BROKERAGE, INC.
530 OAK COURT DRIVE, SUITE 200, MEMPHIS, TN 38117
Mailing Address: P.O. BOX 240655, MEMPHIS, TN 38124-0655
FOURBRIDGES CAPITAL ADVISORS, LLC
1300 BROAD STREET, SUITE 201, CHATTANOOGA, TN 37402
FTN FINANCIAL SECURITIES CORP
845 CROSSOVER LANE STE 150, MEMPHIS, TN 38117
Mailing Address: 845 CROSSOVER LANE, SUITE 150, MEMPHIS, TN 38117
HARPETH SECURITIES, LLC
FIFTH THIRD CENTER, 424 CHURCH STREET - SUITE 2900, NASHVILLE, TN 37219-2334
HOME FINANCIAL SERVICES, INC.
507 MARKET STREET, KNOXVILLE, TN 37902
775 RIDGE LAKE BLVD., SUITE 200, MEMPHIS, TN 38120
IROQUOIS CAPITAL ADVISORS, LLC
401 COMMERCE STREET, SUITE 740, NASHVILLE, TN 37219
K CAPITAL LLC
425 CUMBERLAND PLACE, NASHVILLE, TN 37215
1519 LIPSCOMB DRIVE, BRENTWOOD, TN 37027
Mailing Address: P.O. BOX 157, BRENTWOOD, TN 37024
MORGAN KEEGAN & COMPANY, INC.
FIFTY FRONT STREET, MORGAN KEEGAN TOWER, MEMPHIS, TN 38103-9980
PARTNER CAPITAL GROUP, LLC
6368 CHICKERING CIRCLE, NASHVILLE, TN 37215
SANDERLIN SECURITIES, LLC
5170 SANDERLIN AVE. - SUITE 102, MEMPHIS, TN 38117
SECURITIES SERVICE NETWORK, INC.
9729 COGDILL ROAD, SUITE 301, KNOXVILLE, TN 37932
Mailing Address: POST OFFICE BOX 30977, KNOXVILLE, TN 37930
SEVILLE CAPITAL, INC.
124 MABRY HOOD ROAD, KNOXVILLE, TN 37922
SILVER OAK SECURITIES, INCORPORATED
3339 N. HIGHLAND AVE, JACKSON, TN 38305
TAYLOR SECURITIES, INC.
100 WINNERS CIRCLE, SUITE 400, BRENTWOOD, TN 37027
THE SECURITIES GROUP, LLC
6465 NORTH QUAIL HOLLOW ROAD, SUITE 400, MEMPHIS, TN 38120-1417
THOROUGHBRED FINANCIAL SERVICES, LLC
5110 MARYLAND WAY, SUITE 300, BRENTWOOD, TN 37027
TRUSTCORE INVESTMENTS, INC.
105 WESTWOOD PLACE, SUITE 400, BRENTWOOD, TN 37027-1015
265 BROOKVIEW CENTRE WAY, SUITE 504, KNOXVILLE, TN 37919
VELOCITYHEALTH SECURITIES, INC.
95 WHITE BRIDGE ROAD, SUITE 409, NASHVILLE, TN 37205
775 RIDGE LAKE BLVD., SUITE 200, MEMPHIS, TN 38120
WILEY BROS.-AINTREE CAPITAL, LLC
40 BURTON HILLS BLVD., SUITE 350, NASHVILLE, TN 37215
WUNDERLICH SECURITIES, INC.
6000 POPLAR AVENUE, SUITE 150, MEMPHIS, TN 38119