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Maine Securities Attorneys

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

Investment fraud can happen anywhereeven in Maine. A recent case of potential investment fraud in Maine illustrates why you may need a Maine securities attorney.

Lighthouse MaineCovetrus, a veterinary technology company based in Portland, Maine, is the subject of a lawsuit that alleges the company misled investors, artificially inflating its stock price before it went public in February 2019. According to the Portland Press Herald, the City of Hollywood, Florida Police Officers’ Retirement System filed a class-action lawsuit against Covetrus after the system invested in the company and their pension fund lost money.

How did this all come about? Covetrus was born out of a merger between Portland-based Vets First Choice and Henry Schein Animal Health, a veterinary supply and software company based in Melville, New York. As a result of the merger, Covetrus ultimately became Maine’s largest publicly-traded firm. But the lawsuit alleges that Covetrus painted too rosy a picture of their finances. The lawsuit alleges that Covetrus traded at artificially high prices between February and August, when its first quarterly earnings report was released and investors discovered that the company earned $50 million less than expected. This came as a surprise because Covetrus allegedly downplayed certain factors to investors, such as the loss of a major client and online competition, while also failing to disclose exactly how much the merger cost. While Covetrus’s stock price was $46.19 when it went public, by October 2019 it was trading at just $11.88.

This case demonstrates how investors, whether they be sophisticated or inexperienced, can be taken advantage of by unscrupulous players in the investment world. If you think you may have been the victim of investment fraud, you shouldn’t hesitate to contact a Maine securities attorney. You should always contact a Maine securities attorney if you have questions about stock fraud in Maine, but it is also crucial to understand how Maine state regulators work to prevent investment fraud in the first place.

How Maine Protects Investors From Broker Fraud

How does Maine protect investors from investment fraud, including broker fraud? The Maine Office of Securities, under the umbrella of the Department of Professional & Financial Regulation, has a three-fold mission when it comes to investor protection:

  1. Investigating and prosecuting violations of securities laws
  2. Licensing broker-dealers, brokers, investment advisers, and other financial professionals
  3. Evaluating registration and exemption documents from securities issuers who seek to offer securities in Maine

When prosecuting and investigating violations of securities laws, Maine securities regulators focus their attention on the Maine Uniform Securities Act. The Maine Uniform Securities Act is one of many state-specific “Blue Sky Laws” that regulate securities at the state level. The Maine Uniform Securities Act:

  • Delineates how securities must be registered, and which securities are exempt from registration
  • Describes fraud and liabilities
  • Provides provisions for the protection of vulnerable adults from financial exploitation
  • Details licensing requirements for brokers, broker-dealers, investment advisers, agents, and investment adviser representatives

To this end, Maine securities regulators are responsible for the licensure of brokers and other investment professionals. As such, the agency encourages Maine residents to call the Maine Office of Securities if they have questions about whether or not their broker is properly licensed to sell securities in the state of Maine.

Investor Education is also a key mission of the Maine Office of Securities, which has published a series of informative brochures. Publications include:

Maine’s commitment to investors was further demonstrated in September 2019, when Maine’s Attorney General, Aaron M. Frey, became a plaintiff in a federal lawsuit that alleges that the Securities and Exchange Commission’s “Regulation Best Interest” is unlawful and is not in the best interests of investors. According to Mainebiz, Maine joined six other states and the District of Columbia in taking a stand for investors by publicly opposing the SEC’s “Regulation Best Interest.” While ostensibly designed to protect investors, “Regulation Best Interest” (sometimes referred to as “Regulation BI”) does not hold brokers to the same fiduciary duty as investment advisers. In other words, a broker can recommend investments to clients that serve the broker’s own interests. As of March 2020, the litigation was ongoing. “Regulation Best Interest” is scheduled to take effect in June 2020.

Choosing a Maine Securities Attorney

When choosing a Maine securities attorney, it’s important to find someone who is knowledgeable, experienced, and focused on the well-being of you, the client. While other firms span various practice areas, Fitapelli Kurta LLC is laser-focused on investor advocacy. Our securities attorneys have years of experience defending brokerage firms against investor claims; now, every securities attorney in our firm works exclusively on behalf of defrauded investors. Our attorneys tap into their years of working for the “enemy” to advocate and fight for wronged investors in binding arbitrations before FINRA, the Financial Industry Regulatory Authority.

Our securities attorneys have recovered millions of dollars on behalf of our clients, so while we cannot guarantee success, our results speak for themselves. Both of our founding partners are SuperLawyers®, and our firm has received various industry awards, including the Avvo Client’s Choice Award for Arbitration and Martindale-Hubbell's “Preeminent” rating. Our attorneys are regularly quoted in the media on investment-related issues, appearing in trade publications and national media, including the Wall Street Journal and ABC News.

Next Step: Contact a Maine Securities Attorney

While investing can be exciting and a potential way to build wealth, it is important to stay informed about fraud so that you can 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 Maine. Whether you’re in Portland, Bar Harbor, Lewiston, Bangor, Bridgton, or any other town in Maine, 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.