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Hawaii Securities Attorneys: What Every Hawaiian Needs to Know

Investment Fraud in Hawaii: Why You Need a Hawaii Securities Attorney

MauiInvestment fraud can happen anywhere even among what many consider to be paradise: Hawaii. A recent case of potential investment fraud in Hawaii illustrates why you may need a Hawaii securities attorney.

In August 2011, Ryan Kimura, a former Hawaii stockbroker, was sentenced to 57 months in prison for fraud. A former registered representative with Morgan Stanley Dean Witter, he embezzled $1.5 million from a company owned by his father-in-law. He was ordered to pay $1.5 million to his member firm and $500,429 in restitution to the IRS.

While Ryan Kimura’s is an unusual case, it illustrates an important principle: anyone can become a victim of stockbroker fraud. As such, it’s important to become familiar with how you as an investor can protect yourself, preventing the need for a Hawaii securities attorney. It’s also important to recognize that the burden of preventing stockbroker fraud does not fall to investors alone; the state also has a crucial responsibility to protect investors. Read on to learn about how Hawaii protects investors from broker fraud.

How Hawaii Protects Investors From Broker Fraud

How does Hawaii protect investors from broker fraud? The Hawaii Department of Commerce and Consumer Affairs, Business Registration Division - Securities is responsible for regulating securities in Hawaii. The Division’s mission is three-fold:

  1. Regulate the securities industry of Hawaii via the Securities Compliance Branch
  2. Protect investors through the Securities Enforcement Branch
  3. Educate investors through the Investor Education Program

Let’s look at these three initiatives in greater detail.

The Securities Compliance Branch facilitates the registration of securities, broker-dealers, investment advisers, and sales agents who conduct business in Hawaii. It allows broker-dealers and investment advisers to submit filings online. It also allows investors to file complaints online, making it easy for investors who have concerns about a broker or investment adviser to bring their grievances directly to the Securities Division. The Securities Compliance Branch also handles business relating to the following aspects of the securities industry in Hawaii:

  • franchise filings
  • issuer dealers
  • mutual funds
  • unit investment trusts
  • Regulation A (an exemption from registration from public offerings)
  • Regulation D (a private placement exemption)
  • accredited investors (sophisticated, high-net worth individuals or parties who have access to speculative investments that could potentially lead to higher returns but which also carry more risk)
  • small company offerings

The Securities Enforcement Branch investigates complaints of potential violations of Hawaii securities law. It also prosecutes securities fraud. If an investor wants to file a securities complaint with the Division, the Securities Enforcement Branch encourages investors to file a detailed written complaint and enclose copies of any relevant documentation. The complaint should explain:

  • how you first learned of the investment in question;
  • what happened;
  • who was present during relevant conversations;
  • when and where the conversations took place;
  • when and where money or agreements changed hands;
  • how you know your broker made misrepresentations;
  • how your money was misused; and
  • why you decided to come forward.

It is important to note that the state’s authority is limited when it comes to potential securities violations. The Hawaii Securities Division cannot recover investment losses for investors; only a Hawaii securities attorney can do that.

The final mission of the Hawaii Securities Division is Investor Education. Its Investor Education Program disseminates educational materials to educate investors about how they can protect themselves from securities fraud. They produce specific resources for students, military members, and Kupuna (senior citizens). Educational booklets in PDF format, available free of charge to the public via Google Drive, include:

The Investor Education Program also offers seven presentations to the community:

  1. Who We Are
  2. How to Spot a Con Artist
  3. Protect Yourself and Your Money from Predatory Tactics
  4. Understanding Variable Annuities
  5. Avoid Being a Victim
  6. The Ponzi Scheme
  7. Affinity Fraud

Finally the Hawaii Securities Division enforces the Uniform Securities Act of Hawaii, a “blue sky law” that regulates securities at the state level. In brief, the Uniform Securities Act of Hawaii:

  • specifies what securities and transactions are exempt from registration;
  • describes the circumstances by which a securities registration could be denied, suspended, or revoked;
  • explains how brokers, broker-dealers, investment advisers, and other financial professionals must register with the Hawaii Securities Division (unless they are exempt from registration);
  • outlines what conduct is prohibited when it comes to giving investment advice; and
  • delineates what powers the Hawaii Securities Division has when it comes to enforcing the securities laws of Hawaii.

As a reminder, while the Hawaii Securities Division does crucial and important work, if you are seeking to recover investment losses, you should contact a Hawaii securities attorney.

Next Step: Contact a Hawaii Securities Attorney

While investing is one way to grow your net worth, as an investor you must stay informed about fraud to protect yourself and safeguard your financial future.

If you have questions about your investments, please contact the experienced securities attorneys of Fitapelli Kurta. Our securities fraud attorneys have worked with investors from Hawaii. Whether you’re on the Big Island, Maui, O’ahu, or any other island in Hawaii, we’re here to help you. We only get 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.