NEW JERSEY'S CONSUMER FRAUD ACT (CFA) IN BERGEN AND PASSAIC COUNTIES: THE APPLICATION OF CFA ON THE SALE OF A SECURITY

After returning a $12,000 settlement in a personal injury claim, Margaret Lee took her check to the Hillside Branch of First Union

National Bank and instructed an employee to invest $2,000 in a mutual fund. That investment was never made. The bank

employee, who failed to make the investment sought to settle the case with Lee personally. The settlement was rejected and

Lee filed an action under New Jersey's Consumer Fraud Act (CFA). The case was ultimately dismissed by the trial division

because it involved a securities investment. On appeal, however, the trial court's decision was reversed.

Recently, the Supreme Court reversed the Appellate Division's decision and concluded that the CFA did not apply to the sale of

securities. In reaching its decision, the court followed the legislative history and observed that while the legislators' intention

was to have the CFA broadly applied, the 1976 amendment to the CFA specifically defined merchandise in a way that did not

include securities.