Global Navigation
Office of The Attorney General
The State of New Jersey Office of The Attorney General (Dept. of Law & Public Safety) The State of New Jersey NJ Home Services A to Z Departments/Agencies OAG Frequently Asked Questions
Services A to Z Departments/Agencies OAG Frequently Asked Questions
OAG Home
OAG Contact
spacer
Back to News Releases
OAG Home Attorney General's Biography
Attorney General's Biography
spacer spacer spacer
   
 
spacer spacer spacer
spacer spacer spacer
For Immediate Release: For Further Information:
May 7, 2018

Office of The Attorney General
- Gurbir S. Grewal, Attorney General
Media Inquiries-
Lee Moore
609-292-4791
spacer
Citizen Inquiries-
609-984-5828
spacer
spacer spacer spacer
spacer
AG Grewal, State’s Securities Regulator to Congress: Federal Bill Would Weaken State Securities Fraud Enforcement
Joint Letter Urges Federal Lawmakers to Vote Against H.R. 5037
spacer
spacer spacer spacer
spacer
view letter
spacer
spacer spacer spacer
spacer

TRENTON –Attorney General Gurbir S. Grewal and Bureau of Securities Chief Christopher W. Gerold are urging key members of Congress to oppose a federal bill that, according to the State’s top law enforcement official and top securities regulator, will severely weaken state-level efforts to protect investors from securities fraud.

In a letter today to the leadership of the House Committee on Financial Services and the Subcommittee on Capital Markets, Attorney General Grewal and Securities Chief Gerold caution that the federal Securities Fraud Act of 2018 (H.R. 5037) will restrict New Jersey’s ability to enforce its anti-fraud laws and recover investors’ funds.

Among other concerns, the letter notes that, if passed, the bill would prevent state securities regulators from bringing enforcement actions with respect to issuers of securities listed on an exchange (i.e., the New York Stock Exchange, NASDAQ). In the past, such a bill would have rendered state regulators unable to pursue such major securities fraud cases as Enron, Worldcom, AIG, HealthSouth and Qwest Communications.  

The current version of the proposed bill also raises questions about whether New Jersey’s Bureau of Securities could continue to prosecute the kinds of fraud that impact small-scale investors on a daily basis. Read broadly, the letter asserts, it appears the bill could leave the Bureau powerless to enforce New Jersey laws against:

  • A financial advisor “churning” listed securities in the account of a New Jersey senior citizen, resulting in the total loss of her life savings;
  • A broker-dealer engaging in a “pump and dump” scheme to manipulate the shares of a listed security, selling the stock to New Jersey customers at
    inflated prices;
  • A broker-dealer recommending unsuitable-listed securities to a New Jersey investor with disabilities, resulting in the loss of funds intended to cover a lifetime of medical care.

“New Jersey’s Bureau of Securities encounters cases like these on a regular basis and strives to ensure that our State’s law-abiding residents recover their savings when they fall victim to such fraud,” Attorney General Grewal and Securities Chief Gerold write in their letter.  “The federal Securities and Exchange Commission cannot respond effectively to frauds like these on its own – they are too common and widespread. Preempting states’ traditional authority to regulate securities fraud therefore would leave New Jersey residents vulnerable to fraudsters who know that the federal government does not have the resources necessary to police their unlawful conduct.”

The letter goes on to express concern that the proposed bill “does not stop at preventing our Bureau of Securities from protecting New Jersey investors. The bill even could prevent our State from prosecuting fraudsters whose schemes violate our criminal laws.”

While Attorney General Grewal and Securities Chief Gerold acknowledge the bill’s current language is “ambiguous” regarding criminal prosecutions, they assert that “one thing is clear: the bill would create new hurdles that would make it harder for prosecutors to do their jobs.”

The letter concludes with Grewal and Gerold espousing their agreement with the North American Securities Administrators Association (NASAA), which recently sent its own letter to Congress opposing the bill.  The NASAA letter derides the bill as “an attempt to tie the hands of the regulators who are the ‘cops on the beat,’ and the closest to Main Street investors, in favor of large companies engaged in or suspected of securities fraud.”
  
The joint letter sent today by Grewal and Gerold went to Rep. Jeb Hensarling, Chairman of the House Committee on Financial Services, Rep. Bill Huizenga, Chairman of the Subcommittee on Capital Markets, and Ranking Members Rep. Maxine Waters, and Rep. Carolyn Maloney. In the letter, Grewal and Gerold say they “agree” with NASAA’s conclusion that the proposed federal securities bill would be “bad for investors and bad for our capital markets.”


Follow the New Jersey Attorney General’s Office online at Twitter, Facebook, Instagram & YouTube. The social media links provided are for reference only. The New Jersey Attorney General’s Office does not endorse any non-governmental websites, companies or applications.

spacer
spacer spacer spacer
spacer
 
News Index Page I top
 
Executive Assistant Attorney General
Attorney General's Message Ask the Attorney General
Contact OAG About OAG
OAG News OAG Frequently Asked Questions
OAG Library Employment
OAG Grants Proposed Rules
OAG History OAG Services A-Z
Statutes
OAG Agencies / Programs / Units
Other News Pages Otras Noticias en Español Division of NJ State Police Division of Law News Governor's Office News Division of Highway Traffic Safety News Office of the Insurance Fraud Prosecutor Juvenile Justice Commission News Division on Civil Rights News Division of Consumer Affairs News Division of Criminal Justice News Election Law Enforcement Commission Division of Gaming Enforcement News
NJ State Police News Governor's Office News Division of Highway Traffic Safety News Office of the Insurance Fraud Prosecutor Juvenile Justice Commission News Division on Civil Rights News Division of Consumer Affairs News Division of Criminal Justice News Election Law Enforcement Commission Division of Elections News Division of Gaming Enforcement News Office of Government Integrity News
   
Contact Us | Privacy Notice | Legal Statement | Accessibility Statement
NJ Home Logo
Departmental: OAG Home | Contact OAG | About OAG | OAG News | OAG FAQs
Statewide: NJ Home | Services A to Z | Departments/Agencies | FAQs
Copyright © State of New Jersey
This page is maintained by OAG Communications. Comments/Questions: email or call 609-292-4925
OAG Home OAG Home NJ State Police News Governor's Office News Division of Highway Traffic Safety News Office of the Insurance Fraud Prosecutor Juvenile Justice Commission News Division on Civil Rights News Division of Consumer Affairs News Division of Criminal Justice News Election Law Enforcement Commission Division of Elections News Division of Gaming Enforcement News Office of Government Integrity News Click to Enlarge Image Click to Enlarge Image Click to Enlarge Graphic Click to enlarge chart Click to enlarge map Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click to Enlarge Click on image to enlarge... Click on image to enlarge... Click to enlarge...Click to enlarge...Click to enlarge...Click to enlarge... Click to enlarge... click to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlargeclick to enlarge click to enlarge