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Alaska Securities Attorneys: What Every Alaskan Needs to Know

Does Stock Fraud Happen in Alaska?

When corporate executives commit fraud, investors and consumers often pay a steep price. Elizabeth Ann Pierce, the former CEO of Anchorage-based telecommunications company Quintillion, was sentenced on June 19, 2019 to 60 months in prison for defrauding New York investors out of $270 million during her time as CEO. Quintillion operates a high-speed fiber-optic cable system known as the Quintillion System, which allows northern Alaska to access high-speed internet through providers like TelAlaska. According to the U.S. Attorney’s Office for the Southern District of New York, “Between May 2015 and July 2017, Pierce engaged in a scheme to induce two New York-based investment companies to provide more than $270 million to construct the Quintillion System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Quintillion System was built.” Pierce forged documents, and defrauded individuals; two individuals never received any shares despite having invested in Quintillion, which is currently constructing a subsea fiber-optic network to serve remote areas of Alaska. While this case is certainly disturbing, it illustrates a hard truth: financial fraud can happen anywhere, even among the peaceful landscapes of Alaska.

What Protections Do Alaska Investors Have?

The Division of Banking and Securities, part of the Department of Commerce, Community, and Economic Development, protects Alaskans from financial fraud. According to their website, “The Securities and Enforcement Section examines and registers securities, securities dealers and salespersons, investment advisers and their representatives; and is the repository for Alaska Native Claims Settlement Act (ANCSA) corporation proxy information. Together, the three sections enforce the financial services laws to protect consumers, preserve the integrity of the financial systems, enhance legitimate capital formation and deter financial fraud.”

The Division of Banking and Securities seeks to ensure that investors are well-informed and financially literate. Thus, the Division provides information about “blue sky laws”, the Securities Act of 1933, the Securities Act of 1934, and the Alaska Securities Act of 1959, among others. The Alaska Securities Act contains four parts:

  1. Antifraud provisions
  2. Registration and notice of securities professionals
  3. Registration and notice of securities products (stocks, bonds, profit-sharing agreements, interest in agricultural or mineral commodities, etc.)
  4. Exemptions from these registration provisions

One important statute is the Alaska Native Claims Settlement Act (ANCSA), which created 13 Alaska Native Corporations, allowing tribes to retain their ancestral lands and form corporations to foster economic development. These corporations, plus 200 smaller village corporations, have different holdings (such as real estate) and provide valuable services to the Native communities that they serve. According to E. Budd Simpson in an article published in Business News Today and reposted on the website of the American Bar Association, “Alaska Native Corporations (ANCs) are unique business institutions that present an interesting array of opportunities for U.S. and international transactions. ANCs take the place of traditional tribal organizations but are structured like modern business corporations. They are 100 percent minority owned (Native American/Alaska Native), which results in a number of significant business advantages to the ANCs and their business partners.”

According to the article, “Each Alaska Native alive in 1971 was issued 100 shares in the appropriate RNC. If the shareholder came from one of the villages or urban areas that established corporations, he or she received another 100 shares in that corporation as well. The corporations are governed by boards of directors, elected by the shareholders. … The only legal transfers had to be by will or intestacy at the death of the owner, or by certain inter vivos gifts among close relatives. … Every ANCSA corporation remains in Native ownership.”

Alaska Native Corporations invest in the timber industry, petroleum, and oil field services, but they also do business across the United States. For example, they have various commercial and residential real estate holdings. The article goes on to state, “the corporations are a prime economic driver of the state. Collectively, they have revenues in the billions and distribute tens of millions of dollars a year in dividends directly into the economy. They have hundreds of millions in payroll within Alaska and thousands of direct employment jobs. They have made investments all over the United States and globally. As examples, Sealaska has subsidiary businesses in Alabama, Alaska, California, Colorado, Iowa, Washington, and Mexico, all of which sell products globally.” Alaska Native Corporations foster self-reliance, autonomy, and economic growth.

Shareholders of corporations under the Alaska Native Claims Settlement Act need to understand their rights and obligations. The Department of Commerce, Community, and Economic Development provides a booklet and webpage that outlines this information. They also include links to specific statutes relating to ANCSA proxy solicitations and stock.

The Division of Banking and Securities takes steps to keep investors informed. They keep a list of Enforcement Orders, where consumers can view documents relating to ongoing litigation against broker-dealers. They also outline how to file a complaint.

The Division of Banking and Securities oversees and regulates stockbrokers and financial advisors who operate within Alaska. But it cannot represent investors in private arbitrations and lawsuits. Only a securities attorney has that capability.

Additionally, the Division of Banking and Securities is generally unable to enforce the return of lost money to an investor; only a court can do that. For these reasons, investors need to seek out and retain an experienced securities attorney to pursue the recovery of lost assets.

What Makes Us the Right Attorneys?

After years of defending broker-dealers against investor claims, now every securities attorney in our firm works exclusively on behalf of investors. Our attorneys tap into their years working for the “enemy”, using their insider knowledge to advocate and fight for investors who entrusted their hard-earned money with brokers who allegedly violated that trust.

Most securities complaints are not adjudicated in court; rather, they are heard in binding arbitration before a Financial Industry Regulatory Authority (FINRA) panel. This is where we excel.

We get results. Although we cannot guarantee success, our securities attorneys have recovered millions of dollars on behalf of our clients. Our record speaks for itself. Both of our founding partners are SuperLawyers®, and our firm has received various industry awards—the Avvo Client’s Choice Award for Arbitration, for instance, as well as a “Preeminent” rating by Martindale-Hubbell. The media regularly quotes our attorneys on investment-related issues, appearing in the Wall Street Journal and ABC News.

What Should I Do?

There’s no need to be gun shy about investing in the stock market, but, as a current or potential investor, you should educate yourself about fraud. Arming yourself with this knowledge will help you safeguard your financial future.

If you fear you may have been a victim of a financial crime involving securities fraud, please contact the experienced securities attorneys of Fitapelli Kurta. Our securities fraud attorneys have worked with investors from Alaska. Whether you’re in Juneau, Anchorage, Fairbanks, Seward, or any town in between, we’re here to help you. We get only paid if you do. Our attorneys work on contingency: we only collect a fee from clients if we can recover money on their behalf. Call (877) 238-4175 or email info@fkesq.com for your free case consultation.