In order to make an informed investment decision, you need to have access to all relevant facts and details regarding a financial product or opportunity. When a stockbroker or financial advisor presents you with a product or opportunity, they are legally required to disclose relevant information.
Unfortunately, in practice, there are many unscrupulous brokers out there. These brokers may try to push you into an unwise investment product by misrepresenting or omitting material facts. In general, the underlying motivation is to simply sell more of the product, so that they can bring in more commissions and fees. The failure to disclose material information is a serious form of investment fraud.
At Sonn Law Group, our top-rated securities fraud attorneys are skilled advocates for investors. If you lost money because a broker or financial advisor omitted important details related to an investment opportunity, you may have a valid claim to collect financial compensation for your losses.
The Elements of Fraud By Omission Claim
Fraud by omission claims are notoriously complex. To bring this type of claim, you must be able to prove all required legal elements. Notably, the required elements can sometimes vary between different jurisdictions and they can vary when different types of facts are involved. Though, as a general rule, to bring a successful investment fraud by omission claim, you and your attorney will need to present evidence that proves the following five things:
- The defendant concealed or knowingly failed to disclose a material fact;
- The defendant had a professional responsibility to disclose that fact;
- The defendant omitted the fact in order to induce you into taking action;
- You actually relied on the defendant’s inadequate disclosures; and
- You sustained real financial harm as a result of the misrepresentation by omission.
It should be noted that a defendant cannot necessarily use ignorance as an excuse in a fraud by misrepresentation case. There are other factors that need to be considered as well. For example, an investor may also be able to bring a negligent misrepresentation claim, which is a close cousin to a fraud by omission claim. With a negligent misrepresentation claim, an investor may be able to hold a defendant liable if that defendant omitted material information because they failed to conduct due diligence.
Four Signs that Your Broker Omitted Material Facts
Your Own Independent Research Has Uncovered Undisclosed Information
When making a major investment, it is generally a best practice to conduct some of your own independent research. Of course, you are still relying on the financial professional for guidance, but additional verification can be useful for your protection. If you have conducted your own independent research, and you suddenly discover some type of undisclosed information that is concerning to you, you may have been the victim of misrepresentation by omission. You should follow up on the issue immediately.
You Suffered Losses Far Higher Than You Thought Was Possible
In many cases, investors do not learn of an omission until things have gone very wrong. If you were led to believe that an investment opportunity was safe, and then you suffered huge losses, you need to review the issue. Why did your broker or investment advisor not tell you that it was possible to sustain a very large loss? What exactly went wrong?
You may have been in an unsuitable investment. Yet, you may have had no idea because your broker failed to disclose key information about the risks. If that information would have been disclosed at the appropriate time, it may have prevented you from making the transaction.
You Received Paperwork that Does Not Match What You Were Told
The paperwork that you get regarding your investments or brokerage account should always match what you have been told by your investment advisor. If there are any inconsistencies, that should be taken as a sign that there is a serious problem. Inconsistencies should be addressed and resolved. There should be no lingering questions. A common example of this would be an investor finding out that their broker failed to disclose certain investment fees.
You Have Heard a Media Reporting About Fraud
Finally, it is a good practice to keep an eye on media reports regarding fraud cases. If you are investing in a product or company that is suddenly being investigated for fraud, you could have a serious problem on your hands. You need to figure out if you are at risk, and exactly what your financial advisor knows and when they knew it. You should not be burned by someone else’s misconduct or mistake.
Context Matters: Get Your Claim Reviewed By an Attorney
Fraud by omission claims are complicated. In these cases, the context of the transaction always matters. For this reason, it is imperative that you get an experienced investment fraud lawyer by your side as soon as possible. Your lawyer will be able to conduct a comprehensive investigation of your case in order to determine what happened, and what remedies are available. There are three critically important questions that your attorney will need to answer:
- What information was shared with you?
- What information did your financial advisor know that was not shared with you?
- What legal duty did the financial professional owe to you?
With these questions in mind, your investment fraud lawyer can begin reviewing your claim in order to assess whether or not your legal rights were violated and what legal options are available to you. If there is evidence that your stockbroker or investment advisor omitted material facts, they should be held legally liable for your losses.
Were You a Victim of Investment Fraud or Broker Negligence?
Our legal team is here to help. At Sonn Law Group, our securities fraud lawyers have considerable experience handling claims involving misrepresentation by omission. If you believe that you lost a large amount of money due to a material omission, please contact our law firm today to set up a free, fully private review of your case.