New Mexico Securities Attorneys: What New Mexicans Need to Know
In July 2019, a Las Cruces, New Mexico man was convicted of securities fraud and embezzlement after convincing a California woman to invest $600,000 in a fake salsa business. A 70-year-old woman contacted the fraudster as part of her job at a call center, and the two began a romantic relationship over the telephone. He earned her trust by claiming to have been a Major in the Marines who served in Vietnam, saying he had been a prisoner of war with John McCain. After two months, he offered her a one-third stake in his salsa “company” in exchange for her investments. Instead of investing the money in an actual salsa business, according to KRQE, the man, who was on probation for a previous fraud conviction, “used the cash to repay the money he stole in a previous fraud case” and for personal enrichment.
The case of the “salsa swindler” demonstrates that securities fraud can happen in any state, including New Mexico. The New Mexico Regulation and Licensing Department Superintendent Marguerite Salazar announced the news. Securities Division Director Matthew Bouillon Mascareñas said, “This verdict demonstrates the Securities Division’s commitment to zealously pursuing those who perpetrate fraudulent investment schemes in New Mexico, particularly when those schemes target the elderly.”How Does New Mexico Prevent Securities Fraud?
With legislation and a state securities commissioner, New Mexico has provisions in place to protect investors from falling victim to securities fraud. The most substantial piece of legislation governing the securities industry in New Mexico is the New Mexico Uniform Securities Act. It describes how securities must be registered, delineates which broker-dealers must be registered in New Mexico, and outlines exemptions from securities regulations.
The New Mexico Regulation and Licensing Department is responsible for enforcing the New Mexico Uniform Securities Act, investigating complaints and protecting investors through education and outreach. According to their website, “The [New Mexico] Regulation and Licensing Department’s Securities Division protects New Mexicans from fraud and financial abuse by licensing investment professionals, registering securities offering made in the state, offering anti-fraud and educational programs to the public, and investigating fraud and other violations of the state securities laws.”
The New Mexico Securities Division has created a unique, easy-to-remember domain name for their website—redflagsnm.com—so that the public can avail themselves of their resources.
They process the license applications for brokers, but they also investigate complaints and can take action against brokers who violate the New Mexico Uniform Securities Act; in the most serious cases, they refer cases for criminal or civil prosecution.
They also advise entrepreneurs who want to raise capital for their businesses, encouraging entrepreneurs to consider alternatives to offering securities. One alternative is SCOR, or Small Company Offering Registration. Under SCOR, small companies can be exempt from registration with the SEC if they comply with “Rule 504 under Regulation D (up to $1 million), Regulation A (up to $5 million) or Rule 147 for an offering within a single state where the Company is based. The SEC requires notice filings for exemptions under Regulations A and D,” according to the New Mexico Securities Division. For more information about Reg. D and how it applies to investors, see “What is Reg. D?”
The New Mexico Securities Division protects investors by providing educational resources about detecting and preventing financial fraud. For example, they provide specific information about affinity fraud, in which a fraudster purports to be a member of the same ethnic, religious, or community group as the prospective investor. Another version of the affinity scam occurs when a con artist sells an investment to prominent members of a certain group (for example, a church) and then, after giving them a return on their investment, he uses them as a “success story” to pitch his investment “opportunity” to the rest of the group. Within these tight-knit communities, scammers prey on consumers by manipulating their sense of belonging and telling them that “everyone in the community” is joining in on a certain investment. The Securities Division also issues investor alerts, like one alert about “robo-advisers”—investing apps that rely on artificial intelligence (AI) to recommend securities.
As part of their commitment to investor protection, New Mexico takes care to protect the elderly from falling victim to financial crimes. In 2017, New Mexico enacted the Protecting Vulnerable Adults From Financial Exploitation Act, which:
...requires securities professionals to report suspected financial exploitation on accounts belonging to eligible adults to New Mexico Adult Protective Services and the New Mexico Securities Division. The Act also requires training to be provided by firms to their employees who are registered as reps or agents who have contact with eligible adults and have access to account information on a regular basis. This new Act also grants immunity from civil or administrative actions to firms and qualified individuals who act reasonably to report or delay disbursements or certain transactions within the requirements of the Act who have undergone the training required under the Act.
Following state-specific legislation like New Mexico’s Protecting Vulnerable Adults From Financial Exploitation Act, the U.S. federal government passed the Senior Safe Act of 2018, which extends these provisions to a national level. We wrote about the Senior Safe Act of 2018 in our article “How FINRA Protects Elderly Investors from Financial Exploitation.”
When wronged New Mexico investors want to file a securities complaint, the New Mexico Securities Division offers this important tool. They also invite investors or consumers with questions to visit their website at redflagsnm.com or to call (800) 704-5533.
However, the New Mexico Securities Division cannot represent investors in FINRA arbitration; only securities attorneys can do this. Similarly, the New Mexico Securities Division cannot compel a respondent party to return damages to an aggrieved party; only a court has that power. Thus, investors must use the services of a knowledgeable securities attorney in the pursuit of lost funds.What Should I Do?
There’s no need to be hesitant about investing in the stock market, but it is important to stay informed about fraud so that you can protect yourself and 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 New Mexico. Whether you’re in Albuquerque, Las Cruces, Santa Fe, Carlsbad, Taos, Roswell, Rio Rancho, Ruidoso, Farmington, or anywhere in between, 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 email@example.com for your free case consultation.