A recent decision from the Ninth Circuit Court of Appeals has revived a class-action lawsuit against Grant Cardone and his firm, Cardone Capital. At the center of the case are allegations that Cardone misled investors through exaggerated return projections promoted via his massive social media following. For investors who trusted these promises and now feel blindsided by disappointing or nonexistent returns, the case sends a strong message: financial influencers can—and should—be held accountable when they promote unrealistic or deceptive claims.
Although this specific case is not one we would usually handle, we are here to help you if someone managed your account and misconducted themselves. If you or someone you know has been impacted by a broker, don’t hesitate to reach out to Meyer Wilson Werning today. Our attorneys are experienced in broker misconduct cases and will help to guide you through the process with a free consultation.
What the Lawsuit Against Grant Cardone Is Really About
The lawsuit, initially dismissed by a lower court, was reinstated on June 10, 2023, by the Ninth Circuit. It alleges that Cardone and his real estate investment firm violated securities laws by promoting unrealistic and misleading returns to investors online—many of whom trusted his public persona without fully understanding the risks.
The key allegations include:
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Exaggerated return promises: Cardone allegedly promoted expected annual returns of 15% or more, despite concerns raised by the SEC over these projections.
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Inflated examples of earnings: He claimed a $100,000 investment would generate $500 monthly, far outpacing the returns many investors actually received.
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Omission of key risks: The lawsuit claims Cardone failed to disclose important details, such as how fund properties would be financed and what interest he would charge his own funds.
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Failure to share regulatory concerns: The SEC had objected to Cardone’s promotional materials, but that information was not shared with investors.
These details matter because they show how investment pitches that seem exciting and trustworthy on the surface may hide serious risks underneath.
The Ninth Circuit’s Take on the Case
The appellate court found that investors had provided enough evidence to move forward with their claims. Specifically, the court agreed that Cardone’s public statements could be seen as misleading, especially given the SEC’s prior warnings and his ongoing promotional activity. The court also emphasized that even if certain information (like the SEC letter) was publicly available, it doesn’t absolve firms from their duty to disclose material facts clearly to investors.
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How Social Media Has Changed the Investment Landscape
This case illustrates a broader issue that we’ve seen in many of our own clients’ stories: social media has become one of the most powerful tools for promoting investment products. When influencers with large followings combine personal branding with financial advice, the lines can get dangerously blurred.
Why investors are more vulnerable now:
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Influencers create a sense of trust and familiarity—often bypassing the skepticism people might have toward traditional financial firms.
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Promotional content is fast, flashy, and often lacks fine print.
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Online platforms allow for massive reach with minimal oversight.
Cardone’s case is not unique. We’ve seen similar patterns in other cases, where financial influencers promise “life-changing” returns without fully disclosing the risks involved. When those promises fall short, the consequences for investors can be devastating.
Investor Protections That May Apply in These Situations
The revived lawsuit against Cardone relies heavily on Section 12(a)(2) of the Securities Act, which gives investors the right to pursue claims when they are misled by statements made in connection with the sale of securities. This legal provision is designed to protect investors from:
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Material misstatements or omissions
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Unrealistic return projections
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Failure to disclose regulatory concerns or conflicts of interest
While Cardone’s case is ongoing, it’s a reminder that legal protections exist—and they apply even when the pitch comes from an Instagram video or podcast episode instead of a brokerage firm brochure.
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What Investors Misled by Financial Influencers Can Do
For those impacted by finfluencers in a case such as this, options are often limited. This is because most regulations in the industry revolve around managed assets, which finfluencers are usually not taking part in. However, there are exceptions where a precedent is set such as in this case, where investors may be able to recover some of their losses.
Although this case is not one our firm would usually take, we are here to help if you have been affected by someone who has managed your assets and lost your savings irresponsibly. The experienced attorneys at Meyer Wilson Werning have more than 20 years in the industry and over $350 million recovered for our clients. Our focus on investment fraud and securities litigation has helped many investors recover their losses. Contact us today for a free consultation to discuss your case and learn how we can assist you in protecting your financial interests.
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Frequently Asked Questions
What are the main allegations in the Grant Cardone lawsuit?
The main allegations include misleading investors with promises of 15% annual returns on real estate funds and failing to disclose critical information about the investments.
How does the SEC’s involvement affect the case?
The SEC’s objections to Cardone’s projected returns show regulatory scrutiny and stress the need for compliance in investment promotions.
What rights do investors have in finfluencer cases?
Investors have rights under Section 12(a)(2) of the Securities Act, which protects them against misstatements in securities sales.
What are the implications of misleading investment claims?
Misleading claims can lead to financial losses for investors and may result in legal repercussions for the promoters of such claims.
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