Broker Misrepresentation or Omissions

What is Broker Misrepresentation or Omissions

The fundamental principle of both federal and state securities laws is complete disclosure of material risks and conflicts of interests. Many investors rely on information and recommendations from their financial advisors or brokers before approving securities transactions. The misrepresentation or omission of material information regarding an investment that results in losses may be considered a breach of fiduciary duty, and victims of this form of investment fraud may be able to recover their losses.

Financial advisors and brokers have an obligation to fairly disclose all known material facts related to an investment. Material facts encompass information a reasonable person would consider important in deciding whether to sell or purchase a security. Material facts include but are not limited to the disclosure of all fees linked to the investment, as well as known risks associated with the security being recommended or sold. Inaccurate or incomplete information can put investors at risk, and financial advisors and broker-dealers who misrepresent or omit material facts about an investment may be held accountable for resulting losses.

The misrepresentation or omission of investment information by a financial advisor or broker may be an intentional act of fraud or due to negligence. Some unscrupulous advisors and brokers may provide investors with unrealistic expectations for investments or base their recommendation of a security or strategy on an inaccurate risk assessment; others may not perform adequate diligence in researching and disclosing available material facts.

Establishing Misrepresentation or Omission

Under rules established by the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization that operates under oversight from the U.S. Securities and Exchange Commission (SEC) and state securities laws, losses attributed to a financial advisor’s or broker’s misrepresentation or omission of material facts may result in a securities arbitration claim for damages. In order to recover compensation for losses stemming from the misrepresentation or omission of material facts about an investment, an investor must establish details including:

  • The investor relied on the recommendation of a financial advisor or broker
  • The advisor or broker owed an obligation to the investor to disclose the material facts in question
  • The misrepresentation or omission of information related to an investment was negligent
  • The investment resulted in financial loss

Contact Information

To contact us for a free confidential consult, you can call us at (850) 435-7000 (Pensacola) or (800) 277-1193 (toll free). You also can request a free private and confidential evaluation by clicking Securities Misconduct & Fraud Evaluation Form, and your inquiry will be immediately reviewed by one of our attorneys who handles your specific type case.

Additional Information


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