Pennsylvania Investor Resources
The Pennsylvania Securities Act, at least with respect to false statements and omissions states in 70 PA Stat. 1–401 that:
It is unlawful for any person, in connection with the offer, sale or purchase of any security in this State, directly or indirectly:
(a) To employ any device, scheme or artifice to defraud;
(b) To make any untrue statement of a material fact or to omit 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; or
(c) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
70 PA Stat. 1–401 (Pennsylvania Unconsolidated Statutes (2016 Edition)).
Civil Remedies
The Pennsylvania Securities Act, with respect to Remedies, also states that:
b) Any person who purchases a security in violation of sections 401, 403, 404 or otherwise 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, shall be liable to the person selling the security to him, who may sue either at law or in equity to recover the security, plus any income or distributions, in cash or in kind, received by the purchaser thereon, upon tender of the consideration received, or for damages if the purchaser no longer owns the security. Damages are 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. Tender requires only notice of willingness to pay the amount specified in exchange for the security. Any notice may be given by service as in civil actions or by certified mail to the last known address of the person liable.
70 PA Stat. 1–501 Civil Liabilities (Pennsylvania Unconsolidated Statutes (2023 Edition)).
However, in Pennsylvania, there is a catch. Investor victims can only sue “the person selling the security to him,” as set forth above.
The Pennsylvania Securities Act, unlike Section 10(b) of the Exchange Act, only permits “buyers” to maintain a cause of action under the Act, against “sellers” or the issuers of securities, and not intermediaries, such as brokerage firms or stockbrokers selling the securities of third parties.
Specifically, Section 1-501 of the Act, 70 Pa. Con. Stat. 1-501, with respect to Civil Liabilities, does not provide a private cause of action against a defendant who did not “sell” or “purchase” securities under Sections 1-501(a). As the Third Circuit explained in Biggans v. Bache Halsey Stuart Shields, Inc., 638 F.2d 605, 610 (3rd Cir. 1980):
“Section [1-501] gives a cause of action to defrauded sellers and buyers, it only gives the seller or buyer the right to sue the person purchasing or selling the security. Biggans is suing his broker, not the individuals who purchased the securities that his broker sold for him or those who sold the securities that his broker bought for him. Furthermore, the relief provided by the statute for injured parties, which is limited essentially to rescission, would be unavailing in a suit against a broker for churning.”
638 F.2d at 610; See also, Jairett v. First Montauk Sec. Corp., 153 F. Supp. 2d 562, 577 (E.D. Pa. 2001)(holding that plaintiffs may not bring a claim under Section 1-501 against broker-dealer who was not a seller of securities); Zawid v. Elkins & Co., 1982 Pa. Dist. & Cnty. Dec. LEXIS 43 (October 26, 1982)(“the Pennsylvania Securities Act of 1972 does not afford a private cause of action against a broker”).
Pennsylvania Unfair Trade Practices and Consumer Protection Act
The Pennsylvania Unfair Trade Practices and Consumer Protection Law 73 Pa. C.S.A. § 201-1 et. seq. (“UTP/CLP”) is a broad remedial law designed to combat a variety of deceptive and misleading practices against consumers. In addition to compensatory damages, Section 201-9.2(a) of the Act provides for the recovery of treble damages; interest at the rate of 6%; and reasonable attorneys fees and costs for victims of “fraudulent investment services,” as articulated by the Court in Algrant.
Section 201-2(4)(xxi) of the law defines “unfair methods of competition” and “unfair or deceptive acts or practices” as including “[e]ngaging in any other fraudulent conduct which creates a likelihood of confusion or of misunderstanding.” Section 201-3 of the law declares it “unlawful any unfair methods of competition and unfair or deceptive acts or practices defined by the law.” A number of federal courts in Pennsylvania, including the Third Circuit Court of Appeals, have determined that the UTP/CPL is clearly applicable to claims against brokers and investment advisers for fraudulent or deceptive conduct. See, McCullough v. Shearson Lehman Brothers, Inc., 1988 U.S. Dist. LEXIS 1563 (W.D. Pa. 1988); Denison v. Kelly, 759 F. Supp. 199, 202-205 (M.D. Pa. 1991)(alleged fraudulent conduct was in the ‘services’ provided by the brokerage house, which is covered by the UTP)(emphasis added); Advest, Inc. v. Kirschner, 1994 U.S. Dist LEXIS 954 (E.D.Pa. 1994)(actionable conduct was broker’s fraudulent assurance that sales could be sold at a profit) and Merrill Lynch, Fierce, Fenner & Smith v. Masland, 878 F. Supp. 710, 714 (M.D. Pa. 1995)(claims allege that broker misled purchaser by providing inaccurate information and advice regarding securities).
Under the FINRA Code of Arbitration Procedure, the FINRA Securities Arbitration hearing locations will selected based upon the hearing location closest to your residence at the time of the events giving rise to the dispute.
In Pennsylvania, FINRA Arbitration hearings are held in Philadelphia and Pittsburgh
Additional Pennsylvania Investor Resources:
Pennsylvania Department of
Banking and Securities
17 North 2nd Street, Suite 1300
Harrisburg, PA 17101
Victoria A. Reider
Executive Deputy Secretary
(717) 787-2665
(717) 783-5125 (Fax)
https://www.dobs.pa.gov/Pages/default.aspx#
Guiliano Law Group – Securities Arbitration & Investment Fraud Lawyers
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. All consultations are confidential. For more information, contact us at (877) SEC-ATTY.
If you have been the victim of securities fraud or investment fraud you should contact a lawyer. Our services are offered on a contingent fee basis. We will receive payment for services in connection with your case only if there is a recovery. You will not be required to advance any fees to the firm during the course of the litigation. In the event that a settlement, award, or recovery is not made, clients have no financial or other obligation to us. Not admitted in all jurisdictions. The determination for the need for legal services and the choice of a lawyer are extremely important decisions that should not be based solely on advertisements or self proclaimed expertise. The limitation or concentration in any area of practice does not mean that a lawyer is a specialist or expert in a field of law, nor does it mean that the lawyer is necessarily any more expert or competent than any other lawyer. See Important Disclaimer.
All claims arising under state and federal securities laws must be brought within a specified time from the discovery of these claims, or within the occurrence of the events giving rise to your claims, whichever is shorter. If you fail to do file an action within this period, your claim may be potentially barred by the statute of limitations.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com.
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com.
OUR PRACTICE AREAS
FINRA Arbitration
The litigation of individual and group investor claims against securities broker-dealers and investment professionals adjuducated in arbitration before the Financial Industry Regulatory Authority.
Defective Financial Products
Alternative Investments, Promissory Notes, Structured Products, High Yield Bond Funds, Non-Marketable Real Estate Investment Trusts, Inverse and Leveraged ETFs, the Failure to Conduct Due Diligence.
Unsuitable Investments
Speculative or High Risk Investment Recommendations, Unsuitable Investment Strategies, Low Priced Securities, Customer Specific Unsuitability, Inappropriate Investment Recommendations.
Stockbroker Misconduct
Breach of Fiduciary Duty, Churing, Unauthorized Trading, Fraud, Stockbroker Theft, Ponzi Schemes, the Sale of Unapprovied investments.
