Misrepresentation or Omission of Material Facts

Investors rely on their financial advisors to provide complete and accurate information about potential investments so they can make informed decisions. If your advisor misrepresented or failed to disclose material facts about an investment, you may have a legal claim for monetary damages.

What are Material Facts?

A material fact is information that a reasonable person would consider important when deciding whether or not to make a particular securities transaction. Material facts are distinguished from information considered to be merely trivial or unimportant.

According to FINRA, the types of information that may be considered material and should be accurately presented to customers includes:

  • The risk of a particular investment or investment strategy
  • Charges or fees
  • Financial information about the company making a securities offering
  • Technical or analytical information (e.g., bond ratings)

Not sure whether your stockbroker misrepresented or omitted a material fact? Contact our investor protection attorneys for a free case review.

Misrepresentation vs. Omission

Investment advisors and stockbrokers have a duty not only to accurately present certain information about securities offerings. They also have a duty not to omit material information when selling or recommending an investment. This includes a prohibition against telling “half-truths,” such as disclosing some risks or fees, but not disclosing others.

FINRA arbitration statistics show that misrepresentation and omission of facts are among the most common controversy types.

Misrepresentation or omission claims often accompany other claim types, such as breach of contract, negligence, or fraud. Misrepresentations that occur due to an investment professional’s lack of diligence are often considered negligent, while intentional misrepresentations may be considered fraud.

Do I Have a Claim for Misrepresentation?

Numerous laws and regulations prohibit material misrepresentations and omissions of material investment information, including the Uniform Securities Act, the Securities and Exchange Act, and FINRA regulations.

Unfortunately for investors, it can be difficult to know whether material information about an investment has been completely and accurately provided to them—especially if fraud is involved and the broker takes steps to conceal their misconduct. The following red flags could indicate that a misrepresentation or omission occurred:

  • You perform additional research and discover previously undisclosed fees, risks, or company information.
  • The investment you bought is significantly different than the one your broker described to you.
  • You learn through the media that the investment is part of a fraudulent scam, such as a Ponzi scheme.
  • You suffer large and inexplicable investment losses (for example, you were led to believe that the investment was conservative or low risk).

We Can Help You Get Your Money Back

The Business Trial Group’s securities attorneys have helped investors recover millions of dollars in losses caused by misrepresentations and omissions. Because we handle these cases on a contingency-fee basis, you do not risk losing even more money. If we don’t recover your losses, you pay no legal fees.

Do you suspect that your advisor made inadequate disclosures or gave you false information? Contact the securities and investment attorneys in the Business Trial Group for a free case evaluation.