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The Colorado Revised Statutes include the Colorado Securities Act. This Act, C.R.S. Sec. 11-51-101 et seq. contains the state statutory basis for pursuing securities fraud under Colorado law.
The Colorado Securities Act, at C.R.S. Sec 11-51-501, defines fraud as follows:
1) It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly:(a) To employ any device, scheme, or artifice to defraud; (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Individuals are allowed to seek recovery under this statute because the Colorado Securities Act provides individuals a private cause of action. This is provided under C.R.S. Sec. 11-51-604. This statute allows recovery, depending on the facts, damages including legal or equitable relief that the court deems appropriate, including rescission, actual damages, interest at the statutory rate, costs, and reasonable attorney fees.
The Colorado Securities Act also allows for “control person liability.” This allows an investor to sue the entity or individual who directly or indirectly controls the person or entity committing the fraud. C.R.S. Sec. 11-51-604(5).
Time limitations under the act can fluctuate depending on the type of actions is at issue. Generally, the time limitation under the Colorado Securities Act is five years from the date of the sale of the security, or three years from actual or constructive knowledge of the wrongdoing, which ever is first. These deadlines are not jurisdictional. So courts have authority to extend the deadline if, for example, the parties agree to extend the deadlines.
Further, most suits against financial advisors, investment advisors and their firms are required to be arbitrated. In Colorado, arbitrations are not considered civil actions. As such, statutes of limitations do not apply. Instead, eligibility times apply as set the by arbitration venue.
For example, FINRA, the Financial Industry Regulatory Authority, provides the arbitration forum for suits against securities brokers. FINRA arbitration is available if the offending act took place within the last six years, or the last event in a series of events took place in the last six years.