Securities Act and Exchange Act Actions Law Firm Headquartered In New York City

Federal and state securities laws are intricate and ever-evolving. Prosecuting and defending claims, be it private or regulatory, requires more than just legal knowledge. You need a seasoned securities litigation attorney who understands the nuances of these laws and possesses the acumen to present compelling arguments. Our attorneys combine their extensive understanding of these laws with keen strategic insight, ensuring that each client’s case is built on a robust foundation. 

Nematzadeh PLLC’s Founder and Managing Member, Justin S. Nematzadeh, was a core member of the team in the In re Petrobras Securities Litigation (S.D.N.Y.). In 2018, he helped the team achieve a historic $3 billion settlement for the class, as well as precedent-setting rulings. At that time, this was the largest securities class action settlement in a decade, the largest securities class action settlement ever involving a foreign issuer, the largest securities class action settlement ever achieved by a foreign lead plaintiff, the largest securities class action settlement ever that did not involve a restatement of financial statements, and the fifth-largest class action settlement ever achieved in the United States. In praising the lawyers who worked on the case, the Honorable Judge Jed S. Rakoff of the United States District Court for the Southern District of New York stated that the “lawyers in this case [are] some of the best lawyers in the United States, if not in the world.” Justin had played roles in over a dozen other securities class actions that resulted in total recoveries amounting to over $530 million for plaintiffs.  

Honing his experience on both sides of the “v,” while practicing at Gibson, Dunn & Crutcher LLP and representing defendants in bet-the-company securities litigation, Justin played a role in representing defendants in Garofalo, et al. v. Revlon, Inc., et al. (D. Del.). Justin also played a role on the trial team in iBasis Inc.’s lawsuit against Koninklijke KPN NV in connection with an alleged inadequate tender offer, which settled during trial in 2009 before the Delaware Court of Chancery. 

The Securities Act primarily focuses on the initial issuance of securities. Among other key requirements, companies are required to provide potential investors with relevant and truthful information pertaining to securities that the companies offer for public sale. Securities sold or offered to the public are generally required to be registered. Common violations of the Securities Act include the following, without limitation: 

• Sale of unregistered securities – Companies must register their securities before offering them to the public. Registration ensures that potential investors have access to critical financial data and relevant facts about the company’s management, products, and services. An offer or sale of securities without such registration is a violation, unless an exemption applies. There are several types of exemptions from registration under the Securities Act. 
• Providing misleading or false information – Merely registering securities is not enough. The information provided must be accurate and complete. Companies that disclose false or misleading statements or omit material facts in their prospectuses or registration statements could violate the Securities Act.  
• Omission of pertinent information – Even omissions can be problematic. For example, if a company omits material information from its registration statement, especially if that omission renders misleading other information included in the registration statement and that omission would have been considered in an investor’s decision to invest, the omission may be considered a violation. 

Notably, the sale of unregistered securities can trigger a private right of action under the Securities Act, giving aggrieved parties powerful legal recourse. This recourse could include pursuing a class action through retaining a law firm that works on contingency; the aggrieved investor need not pay money out of pocket for attorneys’ fees nor litigation costs and expenses, and such funds would come out of any recovery. The burdens of proving the elements of scienter or causation often are not imposed on plaintiffs pursuing claims under the Securities Act. 

The Exchange Act regulates the secondary trading of securities, such as stocks and bonds. The Securities and Exchange Commission (“SEC”) was established to oversee and enforce the federal securities laws. Ultimately, the Exchange Act focuses on ensuring transparency in securities transactions to protect investors from fraudulent practices. Common violations of the Exchange Act include the following, without limitation: 

• Fraud – The Act forbids fraudulent activities related to the issuance of securities. A company employing manipulative tactics or deceiving investors during the issuance process can be liable under the Exchange Act. The burdens of proving the elements of scienter or causation often are imposed on plaintiffs pursuing claims under the Exchange Act. 
• False or misleading statements in reports – Publicly traded companies are obligated to periodically file detailed reports with the SEC, including, without limitation, quarterly (10-Q) and annual (10-K) reports and other types of releases of material information. Any misleading statements, falsehoods, or material omissions in these documents can have significant ramifications, deceiving investors and leading to skewed valuations. Such inaccuracies can constitute a violation. 
• Failure to disclose material events or facts – Publicly traded companies must promptly disclose material events or facts that might influence investors’ perspectives on the companies. Events might include mergers, acquisitions, executive changes, or other significant occurrences. Delays or failures in such disclosures could breach the Exchange Act’s provisions. 
• Insider trading – Insider trading is one of the most publicized securities violations. It involves the buying or selling of a security based on material, non-public information, where the person buying or selling the security often has a relationship with the company—whether directly or indirectly (through someone else)—that bound the person not to trade based on knowledge of or access to the material, non-public information. Notably, this does not just apply to insiders, such as executives, directors, or employees. Anyone who trades securities based on confidential information, which they have a duty to keep undisclosed, may be culpable. This is a serious offense that could result in criminal prosecution. 
• Manipulating market prices – Market manipulation represents a grave violation. Actions, such as “pump and dump” schemes, where the price of a stock is artificially inflated (pumped) to attract unsuspecting investors, and then rapidly sold off (dumped), can lead to significant investor losses. Spreading false or misleading information to influence stock prices can also result in liability under the Exchange Act. 

Victims of Exchange Act violations could pursue a class action through retaining a law firm that works on contingency; the aggrieved investor need not pay money out of pocket for attorneys’ fees nor litigation costs and expenses, and such funds would come out of any recovery.  

Well-versed in the regulations promulgated by the Financial Institutions Regulatory Authority (“FINRA”), we have experience advocating for clients in FINRA arbitration proceedings. 

The federal securities laws also regulate broker-dealers, ensuring that they maintain high standards of behavior. Examples of misconduct include churning (excessive buying or selling to generate commissions), unauthorized trading, or recommending unsuitable investments based on an investor’s profile. 

Each violation of the federal securities laws carries its own set of consequences, ranging from financial penalties and liability to restrictions on trading–and even imprisonment.  

Arbitration is an alternative dispute resolution method that securities industry participants often use to address grievances. When disputes arise, parties can opt for arbitration proceedings under the FINRA rules. 

FINRA arbitration is generally streamlined compared to court trials, and arbitration may be more cost-effective. Arbitration proceedings are often confidential, and the decisions reached are generally final and binding. Typically in an arbitration, both parties present their case to a panel of arbitrators (or a single arbitrator), who then render a decision.  

The rules of evidence in arbitrations are often less rigid compared to formal litigation, allowing for a potentially straightforward presentation of each party’s case. Arbitrations often conclude within a quicker time frame, as compared to traditional court proceedings. 

While arbitration can be more straightforward than court litigation, it is essential to approach these proceedings with a comprehensive understanding of the FINRA rules and securities laws. Having a skilled securities litigation attorney is the best way to protect your rights and interests. 

Securities litigation is complex and challenging. You can trust in Nematzadeh PLLC to provide the sophisticated representation that is critical for securities litigation, whether you are alleging to have been harmed under the securities laws and seek an attorney to represent you as a plaintiff or in a class action, want to be a confidential whistleblower to the SEC, are defending against allegations of securities violations, navigating a FINRA arbitration proceeding, or responding to an SEC investigation or even one by the U.S. Department of Justice. Contact Nematzadeh PLLC by calling (646) 799-6729 or emailing lawyer@nematlawyers.com for a confidential, free consultation.