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Michigan Securities Fraud Laws

When you purchase shares of stock in a company -- referred to as securities -- the value is based on the company's financial health, future outlook, and any potential liabilities (such as costs associated with an acquisition or changes in the marketplace). Since purchases of stock rely so heavily on this data, it may be tempting for companies to mislead investors or would-be investors through omissions, overstatements, or blatant lies. Whatever the method, the act of intentionally misleading investors is called securities fraud . It's a serious crime, charged as a felony in Michigan, because it undermines the credibility of the financial system as a whole.

While the federal government has its own laws and penalties addressing this crime, the following is a summary of Michigan's securities fraud laws.

Michigan Securities Fraud Laws at a Glance


Michigan Uniform Securities Act (2002) § 451.2101, et seq.

Definition of the Crime

It is unlawful for a person, in connection with the offer, sale, or purchase of a security to directly or indirectly do any of the following:

  1. Employ a device, scheme, or artifice to defraud.
  2. Make an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
  3. Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person.

It is unlawful for a person that advises others for compensation, either directly or indirectly or through publications or writings, as to the value of securities or the advisability of investing in, purchasing, or selling securities, to do any of the following:

  1. Employ a device, scheme, or artifice to defraud another person.
  2. Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

Crime Classifications and Penalties

  • Class D felony, punishable by up to 10 years in prison and/or a fine of up to $500,000 for each violation.
  • An individual convicted of violating a rule or order under this act may be fined, but shall not be imprisoned, if they did not have knowledge of the rule or order.

Civil Liability for Acts of Securities Fraud

  • A purchaser may seek to recover the amount paid for the security (minus any income received) and interest at 6% per year from the date of the purchase, costs, and reasonable attorney fees determined by the court, upon the tender of the security, or for actual damages.
  • A purchaser that no longer owns the security may recover actual damages.
  • Actual damages are the amount that would be recoverable upon a tender minus the value of the security when the purchaser disposed of it (i.e. income received).

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

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Get Professional Legal Help with Your Securities Fraud Case

Securities fraud is an example of a so-called "white collar" crime, since it involves financial sleight of hand and is typically committed by businesspeople or investors. If you've been charged with this offense, an experienced attorney will be able to challenge the evidence against you and formulate a solid defense. Get help today by contacting a Michigan criminal defense attorney near you.

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