What Does a Securities Lawyer Do?

Posted On By Gene Colan

If you’re at all apprised of Wall Street and New York finance, you’ve probably heard the terms hedge funds, exchange commission, brokerage firm, investment adviser, and securities lawyer. Unless you’re active in the industry, though, it probably sounds like a complex bit of jargon. In particular, understanding the role a securities advisor plays in the United States financial services industry and commercial litigation can seem a touch unclear.

The role of securities attorneys

In New York and the rest of the United States, securities attorneys find themselves divided between three distinct facets of federal securities laws. The first is transactional, such as when financial advisors help facilitate broker-dealer agreements. The second is regulatory and involves securities arbitration and the Financial Industry Regulatory Authority (FINRA). The final part involves commercial litigation, federal courts, and navigating securities fraud committed by brokers and institutional investors. Securities attorneys are often involved in all three sectors but focus particularly on litigation and especially on securities fraud.

A securities lawyer sometimes operates in an investment advisor capacity. As an investment advisor, they provide counsel to institutional clients who are trying to raise capital. They also help navigate issues raised by independent investors who believe their investments were mishandled or that they were misled by a faulty business model or erroneous broker advising during the investment process. At a law firm that deals with larger clients and corporate entities, New York securities attorneys often provide legal advice as to how the corporation can “go public.” Going public is, in a sense, providing greater transparency to the public and to FINRA. It shows that these corporate entities are maintaining compliance with current securities laws. That legal advice can also involve how a larger company expands and manages existing capital requirements.

In general, a law firm that houses a New York securities attorney can guarantee years of experience with both local jurisdictions and federal courts. Attorneys should have a great understanding of FINRA and be able to tell you what a FINRA arbitration award entails. In New York in particular, the years of experience that an attorney has can range anywhere from being a former Credit Suisse investment adviser to being a legal representative of Merrill Lynch. It’s important to do research on any lawyer’s pedigree, but when financial crimes and securities fraud carry such heavy penalties, you want to be especially selective when it comes to a securities lawyer.

What is securities fraud?

Securities fraud is also referred to as investment fraud. It’s known as white-collar crime and can take many forms; however, one of the most common investment fraud occurrences happens when misleading investment information is used to make financial decisions. Other types of securities fraud include pyramid schemes (often cleverly relabeled as “multi-level marketing”), Ponzi schemes, embezzlement, and hedge fund fraud. If this seems like a wide swath of crimes that all fall under the same umbrella, that’s because it is. “Securities” is a fairly broad term that incorporates many financial and transactional concepts all in one. This is why law firms retain attorneys that specialize in different areas of securities fraud. It helps ensure that they’re able to match prospective clients with the correct representation that can provide adequate legal advice.

Since New York is home to Wall Street, it’s no surprise that the state and the city have comparatively higher rates of investment fraud. This is part of the reason why New York has many securities law firms around the state. As such, FINRA tends to keep a relatively close eye on Wall Street.

Preemptive protection

For corporations, securities attorneys are the first line of defense when it comes to financial expansion and capital gain. For individuals, these legal representatives can keep an eye on potential investments. The role of the securities attorney is difficult to understand, but if you’re looking to make capital gains and want to keep your investments protected, it’s a good idea to consult legal counsel.