Before investing in a business, you need to be informed. It’s vital to know any risks associated with a company’s operations to avoid making unwise investments.
What information do you have a right to?
Laws protecting investors
Under the Securities Act of 1933, businesses should give investors full disclosure of all material facts that investors may find important to make informed decisions.
Further, under the Securities Exchange Act of 1934, companies publicly offering securities (those that allow the public to directly purchase securities) must be honest with investors about their businesses, the securities they are selling and the risks involved. This act also governs secondary market trading of company securities. People involved in secondary trading (broker-dealers and any other intermediaries) must be honest with investors and put their interests first.
At the state level, investors are protected by the Securities Division of the Kentucky Department of Financial Institutions. The department regulates the state’s securities activities of different individuals and industries, including broker-dealers, broker-dealer agents, investment advisers, investment advisers representatives, issuer dealers, securities regulations and securities exemptions.
If you work with any of these parties, they are required to follow laws laid down by the Securities Division to protect you from investment fraud.
What can you do if you experience investment fraud?
Unfortunately, you may still experience fraud despite doing your research to better ensure that you make the right moves. If this happens, you can report the case to the Securities Division. The department will examine the particular entity or individual to determine if they violated any law and caused you harm as a result. Seeking legal guidance is a good way to get started.
