The Bureau New Jersey Bureau of Securities is part of the executive branch of state government under the Attorney General within the Department of Law and Public Safety and within the Division of Consumer Affairs. The Bureau of Securities regulates the sale of securities in New Jersey, protects investors against fraud, and educates the public about smart investing.
The Bureau of Securities can go after any person or entity selling unregistered or fraudulent securities into or within the state of New Jersey. A self-regulatory agency called the NASD (National Association of Securities Dealers) and state regulatory agencies register and track the employment and disciplinary history of investment salespeople using a database known as the Central Registration Depository or CRD.
If you are about to entrust some of your money to an individual or securities firm, it is worthwhile to do a background check. The CRD holds information on over 600,000 agents and over 6,000 brokerage firms throughout the country. Some of the information contained within the CRD is an investment salesperson's employment history for the past 10 years, licensing or registration status, and disciplinary history, if any. Information can be obtained on the NASD's Web site at http://www.nasdr.com.
Regulation of investment advisors has been split between the U.S. Securities and Exchange Commission (SEC) and the states since the enactment of a federal law known as the National Securities Markets Improvement Act of 1996, known as NSMIA. NSMIA provides that investment advisors with more than $25 million in assets under management are regulated by the SEC and that smaller advisors are regulated by the states. Approximately 70 percent of firms are solely regulated by the states.
The New Jersey Bureau of Securities, based in Newark, is one of 50 state securities regulatory agencies in the United States. Their telephone number is 973-504-3600 and their address is P.O. Box 47029, Newark, NJ 07101. In New Jersey, the Bureau has a staff of about 40 people to enforce the Uniform Securities Law. The primary mission of the Bureau in enforcing the Law is investor protection.
Consumer complaints are frequently resolved with the Bureau of Securities acting as a middleman between the investor and a broker-dealer firm. Those kind of complaints often involve problems with account statements or with a non-responsive broker.
Other complaints are more serious and lead directly to full-scale investigations. The Bureau has approximately 200 enforcement cases in the investigative stage at any given time and more than 30 in active litigation.
Below are some suggestions to avoid becoming the victim of investment fraud:
Check out strangers touting deals. Too many people trust strangers when it comes to their personal finances. Always get written information about an investment opportunity and check with the Bureau of Securities to verify whether an investment is registered with the state.
Always monitor your investments and ask tough questions. Insist on written and oral reports and be wary of investments where investors have trouble retrieving their principal or cashing out profits.
Don't get caught up in "market hype." Investors need to research what a company produces and earns and who is involved in its management. Basic strategies, such as diversification, are always important to follow.