WBK Industry News - State Regulatory Developments

New Jersey Consumer Protection Division Settles Securities Law Investigation

On October 5, 2018, a Minneapolis financial firm with branch offices in New Jersey agreed to settle an investigation into the sale of alternative investments conducted by the New Jersey Division of Consumer Affairs.  As part of the settlement agreement, the firm has agreed to pay $375,000 to resolve the investigation.

The Division’s Bureau of Securities alleged that the firm sold unsuitable non-traded real estate investment trusts and non-traded business development companies, did not reasonably supervise the sale of the alternative investments, and did not keep required books and records.  According to the Bureau, the firm had at least 65 transactions involving alternative investment offerings that were unsuitable for the firm’s New Jersey customers because the transactions violated the New Jersey Prospectus Suitability Standards, and/or violated the firm’s written supervisory procedures regarding the sale of alternative investments.

The Division of Consumer Affairs is charged with, among other things, protecting New Jersey consumers’ rights and regulating the securities industry.  New Jersey Governor Philip Murphy has previously expressed his administration’s commitment to fill in the void left by the federal government’s perceived pullback on consumer financial protection efforts.  When discussing this settlement, the New Jersey Attorney General Grewal stated, “[a]s the federal government pulls away from robust enforcement of our securities laws, it falls to states like New Jersey to ensure that we have a well-functioning financial marketplace.”

The New Jersey Division of Consumer Affairs’ press release on the settlement agreement may be found here.