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

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

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In May 2019, a Maryland man pleaded guilty to wire fraud and conspiracy after defrauding investors out of millions of dollars, which he then spent on fine wines, luxury automobiles, and artworks featuring the character Rich Uncle Pennybags (of Monopoly fame). Kevin Merrill targeted investors who hoped to profit from consumer debt portfolios. Investors thought they would reap gains from Kevin Merrill’s investment advice--but in reality, he was running a Ponzi scheme. Authorities called the Ponzi scheme, which Kevin Merrill perpetrated from 2013 to 2018, one of Maryland’s largest-ever schemes. According to a press release issued by the Department of Justice, Kevin Merrill defrauded investors of $396 million. He was ultimately sentenced to 22 years in federal prison.

This recent case illustrates that investment fraud can happen anywhere, and can be perpetrated by Maryland brokers. Thus, you may need a Maryland securities attorney. Read on to learn about how Maryland protects investors--what to do if you think you’ve been a victim of investment fraud.

How Maryland Protects Investors from Broker Fraud

How does Maryland protect investors from investment fraud, including broker fraud?

The Maryland Securities Division, under the umbrella of the Office of the Attorney General, is responsible for regulating the securities industry in Maryland. While its primary mission is investor protection, the Maryland Securities Division has seven areas of emphasis. The Maryland Securities Division focuses on the following areas:

  • Stockbroker registration
  • Investment advisor registration
  • Securities registration
  • Franchise registration
  • Overnight of business opportunities
  • Enforcement of Maryland securities laws
  • Investor education

The Maryland Securities Division is responsible for the registration of brokers and investment advisors. The Division’s commitment to monitoring brokers and investment advisors doesn't stop with broker registration. As mandated by the securities laws of Maryland, the Maryland Securities Division must oversee brokers and investment advisors. If Maryland investors are unsure as to whether or not a broker or investment advisor is licensed to sell securities or conduct investment-related business in Maryland, the Division encourages investors to call the office to verify the record of any financial professional.

In addition to registering brokers and investment advisors, the Division also registers securities and handles exemptions to registration. The Maryland Securities Act mandates that any person or company offering securities to Maryland residents be registered in Maryland, unless the security is exempt from registration (in which case the offering must meet specific criteria). Again, if Maryland residents are unsure if a given security is allowed to be sold in Maryland, they should not hesitate to contact the Division. And if your broker sold an unapproved security, you should contact a securities attorney.

In addition to traditional securities, the Division also regulates franchises and certain business opportunities. Any company that intends to sell franchises to Maryland residents must register its franchises with the Division, which enforces the Franchise Law. The Franchise Law mandates that franchisees be given a prospectus at least 14 calendar days before the execution of a contract. This is just one way that the laws of Maryland are designed to protect investors and consumers. And when brokers violate securities laws, clients should call a securities attorney.

Similar to its responsibilities regarding the regulation of franchises, the Maryland Securities Division also oversees certain business opportunities. These “business opportunities” are offered on a small scale, mainly through classified ads, seminars, and expos. Examples of business opportunities include the sale of vending machines and greeting card display racks. Maryland’s Business Opportunity Act mandates that anyone proposing these business opportunities must register the opportunity with the Securities Division. The seller must also provide the prospective buyer with a disclosure statement at least 10 days prior to the execution of any agreement.

The Maryland Securities Division investigates violations of, and enforces, Maryland securities laws. The major securities law in Maryland is the Maryland Securities Act, Maryland’s version of a “Blue Sky Law” that regulates securities at the state level. What does the Maryland Securities Act say? The provisions of the law are broad and far-reaching, but here are some highlights:

  • The Maryland Securities Act outlaws misleading filings;
  • forbids investment professionals from engaging in fraudulent or deceptive activities;
  • specifies that all agents (including brokers and investment advisors) must be registered with the state of Maryland; and
  • makes it illegal to use a “senior or retiree credential or designation” in a misleading way to sell securities.

Laws are important, but it is better to prevent fraud through education than prosecute fraud after it has already happened. To that end. Investor Education is also a priority of the Maryland Securities Division. The Division writes its own publications, in addition to distributing publications written by the North American Securities Administrators Association (NASAA). These publications include:

The Division also distributes educational videos and conducts in-person seminars on how to avoid investment fraud. The Division’s commitment to investors spans the spectrum of investingfrom helping investors choose the right stockbroker for them to educating investors about their rights and responsibilities regarding securities to helping enforce the Maryland Securities Act.

Choosing a Maryland Securities Attorney

When choosing a Maryland securities attorney, it’s important to find someone who is knowledgeable, experienced, and focused on the well-being of you, the client. In contrast to some other firms that span various practice areas, Fitapelli Kurta LLC has a singular focus: 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 other side” 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. Thus, although 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 Maryland Securities Attorney

While investing can be exciting and a potential way to build wealth, investors must stay informed about fraud to protect themselves and safeguard their financial futures.

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 Maryland. Whether you’re in Baltimore, Annapolis, Laurel, Bethesda, Silver Spring, or any other town in Maryland, 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 for your free case consultation.