Legal Question in Securities Law in California

Re: Stockbroker enlisted minors for stock purchase

Hmmmmmm, what a strange incident! Without more facts and probably some investigation, neither I nor any other lawyer could predict what will happen. The one thing that is for sure, however, is that your son and you will need a lawyer.

First, this entire incident smacks of fraud.

Second, without knowing exactly what the broker hired your son to do I cannot speculate which or how many securities laws the broker has broken, but more than one, I'm sure.

Third, you ask whether YOU are liable for the return of the money, and also whether the BROKER is liable, but not whether your son is liable. This is a possibility you need to be alert to; in California a minor is usually not liable for his contracts, but can be held personally liable for his torts, including fraud and misrepresentation.

As to parental liability, it can come in two ways. First Civil Code section 1714.1 imposes liability on parents for "willful misconduct" of their minor children. This statute is aimed at violence, vandalism and the like, but might be alleged to apply to "white collar" damage by an aggressive plaintiff attorney. Second, parents can be found negligent in supervising their children and thus liable for the consequences. This is a more likely theory to be used against you and whether you would be found negligent and liable depends upon the facts and circumstances and the quality of the arguments made to the jury by each side.

With 110 potential adversaries, you and your son need to get pro-active as soon as possible. Get a lawyer. Investigate the broker. Gather the facts and evidence. Contact the National Association of Securities Dealers and your local police or sheriff department's white-collar crime units.