Nashville, TN asked in Contracts and Securities Law for Tennessee

Q: Can I sue someone for violating securities laws in federal court for soliciting investment from me in a project?

- the person asked me for money to fund a record

- I gave money, person made record. I didn’t get the promised return.

- person is not licensed to sell securities

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1 Lawyer Answer
Robert W. Pearce
Robert W. Pearce
  • Securities Law Lawyer
  • Boca Raton, FL

A: You can only sue under the Federal securities laws if you were sold a security. The test commonly used by the courts to decide whether you were sold a security is known as the Howey Test. If you were the only investor who made a loan for a specific return of interest it's unlikely you were sold a security. If your money was pooled with others and the pool was managed by someone else for all of the investors to earn a profit on this record deal then its likely you were sold a security and the seller was subject to the Federal securities laws.

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