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What Is Misrepresentation?

We see commercials and advertising all the time, and we're used to sales pitches that leave some details out or carefully represent a product in its best light. However, when it comes to investing in securities, that kind of marketing practice isn’t just frowned upon—it’s illegal.

Securities Fraud Attorneys Explain Misrepresentation

When you speak with your financial professional about a potential investment opportunity, you have a right to all the important information associated with the investment. Your stockbroker, investment adviser, or other financial planner is bound by law to disclose this information to you before you hand over your cash. If a broker makes misleading statements about an investment or fails to give you the information you need, then it could be misrepresentation, and you could be headed for arbitration.

As securities lawyers, we often see misrepresentation or omissions in the form of:

  • "Guarantees." Very little is set in stone when it comes to investing in securities, and you should be suspicious of any claims that guarantee high returns, that an investment will definitely do well and go up, or that there is "no risk."
  • Commissions and fees. Your broker or advisor is required to disclose information about fees and commissions associated with any investment. If you were not informed of such information, it could be considered to be misrepresentation or omission.
  • Performance. When looking at the performance history of an investment, be aware that it can be easy to paint the performance in a flattering light. For example, a non-traded REIT may report its offering price for four or five years before an actual market value is established, so it is difficult to gauge its actual performance. Your broker or advisor has a duty to look into the investment and give you an accurate idea of its practical performance.

If you're not sure if you have a claim against a financial professional for investment misrepresentation and/or omission, schedule a completely free legal consultation with a highly respected securities lawyer today. We'd be happy to answer your questions about investment misconduct and whether you have a claim. Contact us today!

Watch our helpful video to learn more about misrepresentations and omissions:

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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