FINRA has proposed new disclosure requirements for brokerage firms and stockbrokers that sell securities to U.S. military personnel or their dependents. The proposed rule would require brokers and brokerage firms who sell securities on military bases to military personnel or their dependents to disclose that the securities have not been sanctioned, recommended, or encouraged by the federal government.
While brokers and brokerage firms already are required to recommend only suitable investments and are prohibited from misleading military investors to believe that the government has recommended or sanctioned the securities, the proposed rule would require express disclosure that the government is not sanctioning the securities. The goal of this proposal is to prevent incidents of military investment fraud.
Coincidentally, the rule proposal comes on the heels of the SEC accusing a U.S. Army veteran of running an investment scheme that targeted current and former military members.
U.S. Department of Defense rules already impose restrictions on soliciting securities on military installations. These include background checks on brokers’ licenses and complaint history before granting brokers’ permission to solicit on military property and maintaining lists of brokers who have had their solicitation privileges revoked.
Dimond Kaplan & Rothstein, investment fraud lawyers in Los Angeles, Miami, New York, and West Palm Beach represent investors throughout the country. If you are a military member who has suffered investment losses as a result of investment fraud or stockbroker negligence, contact us for a free case evaluation.
