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 Washington, D.C. for DC residents, and residents of Maryland and Virginia who request a Washington D.C. forum.
The Securities Fraud Lawyers at Greco & Greco, P.C. regularly represent Washington, D.C., Virginia, and 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.
The Washington, DC Office of Insurance, Securities, and Banking regulates the sales of securities in Washington, DC. Its website provides information on securities Statutes and Rules, and information on how to file a complaint.
Washington, DC''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 Washington DC 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 Washington, DC Securities Act is as follows:
§ 31-5606.05. Civil liability
(a)(1) A person shall be civilly liable to another person who buys a security if the person:
(A) Offers or sells a security in violation of § 31-5602.01, § 31- 5603.01, or § 31-5605.05, of a rule or order under § 31-5604.05 which requires the affirmative approval of sales literature, or of a condition imposed under § 31-5603.05(g) or (h); or
(B) Offers or sells a security by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statement made, in the light of the circumstances under which made, not misleading, the buyer does not know of the untruth or omission and the offeror or seller does not sustain the burden of proof that the offeror or seller did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.
(2) A person shall be civilly liable to another person who sells a security if the person 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 statement made, in the light of the circumstances under which it is made, not misleading, the seller does not know of the untruth or omission, and the purchaser does not sustain the burden of proof that the purchaser did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.
(3) A person shall be civilly liable to another person if the person:
(A) Acts as an investment adviser or representative in violation of §§ 31- 5602.02, 31-5605.02, 31-5605.05(b), or of any rule or order adopted under § 31-5604.05; or
(B)(i) Receives directly or indirectly any consideration from the other person for advice as to the value of securities or their purchase or sale or for acting as an investment adviser or representative under § 31-5601.01(17) or (18), whether through the issuance of analyses, reports or otherwise, and
(ii) Employs an device, scheme, or artifice to defraud the other person or engages in an act, practice, or course of business which operates or would operate as a fraud or deceit on the other person.
(b)(1) In an action brought under subsection (a)(1) of this section, a buyer may sue at law or in equity:
(A) To recover the consideration paid for the security, interest at the rate used in the Superior Court of the District of Columbia from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security, upon the tender of the security and any income received on it; or
(B) For damages if the buyer no longer owns the security. The amount of damages shall be the amount that would be recoverable on a tender less the value of the security when the buyer disposed of it, plus interest at the rate used in the Superior Court of the District of Columbia from the date of disposition.
(2) In an action under subsection (a)(2) of this section, a seller may sue at law or in equity:
(A) On tender of the consideration paid for the security, to recover the security, the amount of any income received on the security, costs, and reasonable attorneys' fees; or
(B) For damages if the buyer no longer owns the security.
(3) In an action brought under subsection (a)(3) of this section, a person may sue at law or in equity for the rescission of the advisory contract and any damages resulting from the violation, interest at the rate used in the Superior Court of the District of Columbia from the date of payment of the consideration plus costs and reasonable attorney's fees, less the amount of any income received from such advice.
(c) A person who directly or indirectly controls a person liable under subsection (a) of this section; a partner, officer, or director of the person liable; a person occupying a similar status or performing similar functions; an employee of the person liable who materially aids in the conduct giving rise to the liability; and a broker-dealer or agent who materially aids in the conduct shall be liable jointly and severally with, and to the same extent as the person liable, unless her or she is able to sustain the burden of proof that he or she 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. There shall be contribution among the several persons so liable.
(d) A tender specified in this section may be made at any time before entry of judgment.
(e) A cause of action under this chapter shall survive the death of any person who might have been a plaintiff or defendant.
(f)(1) A person may not sue under subsection (a)(1) and (2) of this section after the earlier 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:
(A) To enforce any liability under subsection (a)(1)(A) of this section unless brought within one year after the violation on which it is based; or
(B) To enforce a liability under subsections (a)(1)(B) or (a)(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 after the earlier of 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.
(g) No person may sue under this section if:
(1) The buyer received a written offer, before suit and at a time when the buyer owned the security or asset, to refund the consideration paid, and interest at the rate used in the Superior Court of the District of Columbia from the date of payment, less the amount of any income received on the security or asset, and the buyer failed to accept the offer within 30 days of its receipt;
(2) The buyer received such an offer before suit and at a time when the buyer did not own the security or asset, unless the buyer rejected the offer in writing within 30 days of its receipt; or
(3) 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, and interest at the rate used by the Superior Court of the District of Columbia from the date of payment, and the seller failed to accept the offer within 30 days of its receipt.
(h) No person may sue on a contract if the person has made or engaged in the performance of the contract in violation of this chapter or any rule or order adopted under this chapter, or has acquired any purported right under the contract with knowledge of the facts by reason of which its making or performance violated this chapter or a rule or order adopted under this chapter.
(i) A condition, stipulation, or provision that binds a person who acquires a security or asset, or receives a investment advice, to waive compliance with a provision of this chapter or a rule or order adopted under this chapter shall be void.
(j) The rights and remedies provided by this chapter shall be in addition to any other rights or remedies that may exist at law or in equity, but this chapter does not create a cause of action not specified in this section or authorized under the bonding requirements of § 31-5602.03(h).
FINRA securities brokerage firms with their main offices in Washington, DC:
ABA BUSINESS SERVICES, LLC
1120 CONNECTICUT AVE, NW, WASHINGTON, DC 20036
Mailing Address: 1120 CONNECTICUT AVE, NW, ATTN: HELEN SULLIVAN, 8TH FLOOR, WASHINGTON, DC 20036
ACHATES CAPITAL ADVISORS LLC
1001 CONNECTICUT AVENUE, N.W., SUITE 715, WASHINGTON, DC 20036
ALBRIGHT SECURITIES LLC
1101 NEW YORK AVENUE, NW, SUITE 900, WASHINGTON, DC 20005
ARC SECURITIES, LLC
1330 CONNECTICUT AVENUE, NW, SUITE 223, WASHINGTON, DC 20036
BRIAN COHN, INCORPORATED
5525 SHERIER PLACE, NW, WASHINGTON, DC 20016
CALLAHAN FINANCIAL SERVICES, INC.
1001 CONNECTICUT AVE. NW, SUITE 1001, WASHINGTON, DC 20036
CAPFI PARTNERS, LLC
2445 M STREET NW, 2ND FLOOR, WASHINGTON, DC 20037
CHERTOFF CAPITAL, LLC
1110 VERMONT AVENUE, N.W., 4TH FLOOR, WASHINGTON, DC 20005
COMPASS POINT RESEARCH & TRADING, LLC
3000 K STREET, NW, SUITE 340, WASHINGTON, DC 20007
ENGLAND SECURITIES, LLC
1015 18TH STREET, NW, SUITE 900, WASHINGTON, DC 20036
FOLGER NOLAN FLEMING DOUGLAS INCORPORATED
725 15TH STREET N.W., WASHINGTON, DC 20005-2109
FTI CAPITAL ADVISORS, LLC
1101 K STREET NW, 10TH FLOOR, WASHINGTON, DC 20005
Mailing Address: 1101 K STREET NW, SUITE B100, WASHINGTON, DC 20005
GLOBAL MARKETS, LLC
2700 QUEBEC STREET NW, WASHINGTON, DC 20008-1223
HAMILTON CLARK SECURITIES COMPANY
1701 PENNSYLVANIA AVENUE NW, SUITE 300, WASHINGTON, DC 20006
HEIGHT SECURITIES, LLC
975 F STREET, NW, SUITE 520, WASHINGTON, DC 20004
ICMA-RC SERVICES, LLC
777 NORTH CAPITOL STREET, NE, SUITE 600, WASHINGTON, DC 20002-4240
JOHNSTON, LEMON & CO. INCORPORATED
1101 VERMONT AVENUE - NW, WASHINGTON, DC 20005-3521
KALORAMA CAPITAL, LLC
1776 I STREET NW, SUITE 900, WASHINGTON, DC 20006-3757
LBC CAPITAL PARTNERS LLC
700 13TH STREET, NW. STE 925, WASHINGTON, DC 20005
LFC SECURITIES, LLC
1250 CONNECTICUT AVE NW, SUITE 310, WASHINGTON, DC 20036
MCCRACKEN ADVISORY PARTNERS CORPORATION
1010 VERMONT AVE NW, STE #710, WASHINGTON, DC 20005
MILESTONE ADVISORS LLC
1775 I STREET, NW, SUITE 800, WASHINGTON, DC 20006
SCULLY CAPITAL SECURITIES CORP.
1133 15TH STREET NW, SUITE #900, WASHINGTON, DC 20005
SUCCESS TRADE SECURITIES, INC.
1900 L. STREET NW, SUITE 301, WASHINGTON, DC 20036
TAYLOR FINANCIAL SERVICES, LLC
1128 16TH ST., NW, WASHINGTON, DC 20036
TCG SECURITIES, L.L.C.
1001 PENNSYLVANIA AVE., NW, SUITE 220 SOUTH, WASHINGTON, DC 20004-2505
TWS FINANCIAL, LLC.
1101 PENNSYLVANIA AVENUE SUITE 600, WASHINGTON, DC 20004
1227 25TH STREET, NW, SUITE 609, WASHINGTON, DC 20037
ULLICO INVESTMENT COMPANY, INC.
1625 EYE STREET, NW, WASHINGTON, DC 20006
WACHTEL & CO., INC.
1101 FOURTEENTH ST.-NW, WASHINGTON, DC 20005
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