The Nevada Securities Laws
The Nevada Securities Laws provide protections for investors who purchase securities in Nevada or from Nevada registered corporations. All securities offered for sale in Nevada must either be registered or exempt from registration; Broker Dealers and their sales representatives who sell securities must be licensed or exempt; and investments must not be sold through the use of misrepresentations or omissions. The Nevada Securities Laws can be found at Chapter 90 of the Nevada Revised Statutes and the interpretations of the Nevada Securities Laws and further applications can be found in Chapter 90 of the Nevada Administrative Code.Nevada Securities Laws; What is a Security?
Broadly defined a “Security“ is an investment of money in a common enterprise with the expectation of profits from the efforts of others.
NRS §90.295 provides the definition: Also, recognizing "the virtually limitless scope of human ingenuity... 'by those who seek to use the money of others on the promise of profits” State v. Friend 40 P. 3d 436, 118 Nev. 115 (2002), Nevada follows S.E.C. v. Howey, 328 U.S. 293 and its progeny (the “Howey test”) in defining whether an investment is considered to be a security.
In Howey, the United States Supreme Court defined a security as “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”Nevada Securities Laws: Protecting Investors From Misrepresentations in the Sale of Securities
The Nevada Securities Laws at NRS §90.570 protect investors from misrepresentations and omissions made during the sales process.
The Nevada Administrative Code at NAC 90.328 lists the type of conduct that would give rise to a violation of the Nevada Securities Laws under NRS§ 90.570
Some of the examples cited are:
- Engaging in a transaction with a customer at an unreasonable price;
- Charging an excessive commission;
- Telling a prospective investor to disregard risk disclosures in a prospectus or private placement memorandum;
- Using misleading or deceptive advertising;
- Using “inside information” to solicit a purchase;
- Selling “penny stocks” to a customer without determining the investments are suitable for that customer;
- Using “sales contests” to sell securities;
- Refusing to follow an instruction to sell a security;
- Failing to deliver a prospectus or private placement memorandum to a customer.
The Nevada Securities Laws at NRS §90.310 protect investors by requiring that broker dealers and “sales representatives" obtain licenses in order to sell investments to the public.
A sales representative (stockbroker, registered representative, financial advisor) is defined under NRS §90.285 as someone who is authorized to act for a brokerage firm or a company, and is engaged in the business of selling securities to the public.
NRS §90.310 requires that all broker dealers and sales representatives acting in Nevada must be licensed (or exempt from licensing) to sell securities.Nevada Securities Laws: Securities Must Be Registered For Sale
The Nevada Securities Laws protect investors by requiring that investments sold in Nevada need to be either registered or exempt from registration. Registration of securities is expensive, time consuming and complicated, and many companies chose to apply for one of many exemptions.
NRS §90.460 requires that a security sold in Nevada must either be registered for sale or exempt from registration. Registration of securities in Nevada may be made by filing; NRS §90.470, by coordination NRS §90.480: or by qualification NRS §90.490.
NRS §90.520 and NRS §90.530 provide an exhaustive list of exemptions that are available, while NRS §90.550 provides that the Nevada Securities Administrator can deny or revoke any exemption given to any security transaction or offering.
The Nevada Secretary of State provides an information page on registration and licensing, as well as an explanation of the process and the procedure to apply for exemptions.Nevada Securities Laws: Protecting Elderly or dependent Adults
Elderly or “dependent” adults who invest are protected under Nevada Law.
NRS §200.5092 sets forth the definition of elder exploitation, and describes the various ways that elderly and dependent adults are taken advantage of by people who act in a position of trust to an elderly or dependent adult.
NRS §41.1395(1) provides a penalty of two times the actual damages for exploiting an elderly or dependent adultNevada Securities Laws: Remedies for Violations
Under Nevada law if a person (a) sells a security that is not registered or exempt from registration, or (b) is not licensed at the time of the transaction, or (c) sells a security based upon misrepresentations or omissions, he is liable to the purchaser for the amount paid, interest and attorney’s fees.
The civil remedies section of the Nevada Securities Laws is found at NRS §90.660
In addition, control persons, which include officers and directors, and broker dealers and stockbrokers may also have liability for the sale.Nevada Securities Laws: Statute of Limitations
Claims for violations of the Nevada Securities Laws must be brought within a proscribed time period, or the claim will be lost. Under NRS §90.670 claims must be filed within two years of the discovery of the violation (or within two years of when a reasonable person would have discovered the violation), and within a maximum of five years after the violation occurred.Nevada Securities Laws: Choosing the Right Nevada Securities Attorney
A securities attorney who represents investors in either court or in an arbitration in Nevada must be approved to do so by the Nevada State Bar. Only an active, licensed Nevada attorney is able to represent investors in court or in a FINRA arbitration. Attorneys not licensed in Nevada must be admitted pro hac vice and approved by the Nevada State Bar, or else they will be engaging in the unauthorized practice of law.
The Law Office of David Liebrader has been representing Nevada investors since 1993, exclusively in the field of investment loss recovery. We have experience with a full range of investment loss matters, and are ready to offer representation in all courts in the state, and in FINRA arbitrations. We have served as led counsel on over 1000 investment fraud cases, and have recovered over $50 million for our clients. In 2008 David Liebrader received the largest FINRA arbitration award in Nevada history on behalf of Nevada investors.