A former representative of the Michigan house of representatives has been ordered to cease and desist from selling unregistered securities by Michigan’s Corporations, Securities and Commercial Licensing bureau (CSCL). Fulton Sheen, who spent three terms in the state house, allegedly assisted a Missouri-based company called Shaar 2 LLC in the offer and sale of unregistered investment contracts to a Michigan resident who was age 60 or older at the time of sale.
The CSCL is authorized to issue summary cease and desist orders under the Michigan Uniform Securities Act. The Act also provides investors with private causes of action. For example, Section 509(2) of the Act states that “[a] person is liable to the purchaser if the person sells a security in violation of section 301 [of the Act,]” which prohibits the offer or sale of a security in the State of Michigan unless (a) the security is a “federal covered security”; (b) the security, transaction, or offer is exempted from registration under the Act; or (c) the security is registered under the Act. MCL 451.2301.MCL 451.2509(2).
At least one court applying the Michigan Uniform Securities Act has held that civil liability under the Act extends not only to “direct sellers”, but also to “solicitor sellers” who “urge a prospective purchaser to buy.” In re Trade Partners, Inc. Investors Litigation, 2008 WL 3875396 (WD Mich 2008). Courts applying other states’ codifications of the Uniform Securities Act have reached the same conclusion. See, e.g., Maybank v BB & T Corp, Branch Banking and Trust Co, 2012 WL 3157006 (DSC 2012)(holding that “statutory seller status” extends to persons “who urge the buyer to purchase.”); Massachusetts Mut. Life Ins. Co v Residential Funding Co, LLC, 843 F Supp 2d 191 (D Mass 2012)(“definition [of “seller” under Uniform Securities Act] includes those who actually transfer title of the securities as well as brokers and other agents of the direct seller.”).
A plaintiff who prevails on a claim brought under subsection 509(2) of the Act may recover either actual damages (in the event that disposition of the security has already occurred), or the amount of the consideration paid for the security, less the amount of any income received on the security, together with costs, reasonable attorney fees, and interest at 6% per year from the date of the purchase. MCL 451.2509(2).
If you have suffered investment losses as a result of investments made in or through Shaar 2, LLC, Mika Meyers, PLC may be able to assist you in recovering some or all of your losses. Call investor rights attorney Daniel J. Broxup for a free no-obligation consultation at 616 632 8059.