Investment professionals are required to make full disclosure of all material information related to an investment or investment strategy. Investment professionals who make false and misleading statements or fail to disclose material facts during the purchase or sale of a security or recommendation of an investment strategy can be held liable for losses sustained from that investment or strategy.
A misrepresentation is an affirmative act of making a false or misleading statement of fact (e.g., promising unrealistic returns), while an omission is the failure to disclose essential facts (e.g., risks, costs, or conflicts of interest). The misrepresentation or omission must be intentional. Negligence does not suffice. Information is material when a reasonable investor would consider the facts important to the investment decision – that is, the decision of whether to accept the investment professional’s recommendation.
Federal and state securities laws, as well as the rules established by self-regulatory organizations, such as the Financial Industry Regulatory Authority, Inc. (“FINRA”), make it unlawful for an investment professional to make a misrepresentation or omission in connection with the recommendation of a stock, security, investment strategy or financial product.
The Law Office of Jeffrey M. Haber can help you determine whether an investment loss is the result of securities fraud, i.e., material misrepresentations and omissions. Customers who suffer losses as a result of securities fraud may be able to recover their losses in a FINRA arbitration. If you believe your investment professional has intentionally or recklessly made false and misleading statements or omitted material information in connection with your purchase or sale of a security, contact Jeffrey M. Haber to discuss your rights.