Investment Law Compliance

The Hershewe Law Firm attorneys advises securities and investment clients on laws that require compliance to trade securities or provide investment services in the state of Arkansas. The area of investment law is complex because a great number of laws from different jurisdictions apply. Our investment attorneys are familiar with the considerations of running and administering a financial services business or ensuring that from a consumer point of view the appropriate investment laws are complied with.

Federal Securities Laws

The Securities Act of 1933 was the first federal securities statute. The provisions of this Act also known as the “Truth in Securities Act” require that all securities offered for sale is registered with the Securities and Exchange Commission (SEC) unless otherwise exempted. The exemptions include:

• private offerings to a limited number of persons or institutions
• offerings of limited size
• intrastate offerings
• securities of municipal, state, and federal governments

Other provisions of the law are that all investors must receive financial and other significant information concerning securities being offered for public sale. Finally it prohibits deceit, misrepresentations, and other fraud in the sale of securities.

The passage of the Securities Exchange Act of 1934 by Congress established the SEC (Securities and Exchange Commission) and empowers the SEC with broad authority to govern the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SROs) such as the various stock exchanges and the National Association of Securities Dealers, which operates the NASDAQ. The Act also empowers the SEC to require periodic reporting of publicly traded companies and defines other requirements for issuers of securities, provisions covering oversight of broker-dealers, requirements for proxy solicitations and rules regarding tender offers. The 1934 Act defines and prohibits certain types of conduct in the markets such as insider trading (which it defined as when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading) and provides the commission with the disciplinary authority over regulated bodies and their employees.

Many other federal laws affect securities litigation. The Trust Indenture Act of 1939 governs debt securities such as bonds, debentures, and notes that are offered for public sale. The Investment Company Act of 1940 regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public although the Act does not permit the SEC to directly supervise the investment decisions or activities of these companies or judge the merits of their investments. The Investment Advisers Act of 1940 regulates investment advisers who must register with the SEC and conform to regulations designed to protect investors.

The Private Securities Litigation Reform Act of 1995 (PSLRA) was designed to prevent the "routine filing of lawsuits against issuers of securities and others whenever there is a significant change in an issuer's stock price." The Securities Litigation Uniform Standards Act of 1998 (SLUSA) was enacted to curb the practice of plaintiffs opting to bring a parallel suit in state court under state law. Among other provisions under SLUSA, state courts retain jurisdiction over state agency enforcement proceedings. The Sarbanes-Oxley Act of 2002 (SOX) includes a statute that applies to private securities fraud actions making it unlawful for an officer or director of a public company to fraudulently influence or mislead auditors reviewing the company's financial statements.

While the SEC is the primary enforcer of the nation's securities laws, each individual state has its own securities laws and rules. State investment rules are known as Blue Sky Laws. In Arkansas securities laws are enforced through the authority of the Arkansas Securities Department. the Blue Sky Laws provide the states with the power and authority to bring actions against securities violators pursuant to state law. Each state’s securities act regulates the offer and sale of securities as well as the registration and reporting requirements for broker-dealers and individual stock brokers doing business in the state, as well as investment advisers seeking to offer their investment advisory services in the state.

When your matter is one of investment law in Arkansas you should contact us at The Hershewe Law Firm to discuss your claim toll-free at 1-877-382-9734, or complete our quick web contact form.