Investors hire stockbrokers to protect their investments and their personal interests. A large part of that stockbroker’s responsibility hinges on being honest and upfront about your investments and about any potential risks involved in your individual investments or your portfolio as a whole.
Stockbroker Misrepresentation and Omission Violations
Misrepresentations and omissions are serious violations of the trust you put in your broker. Legally, a misrepresentation or omission relating to a security sale is an intentionally false or intentionally misleading statement made for the purpose of misleading a client into making a decision about his or her holdings.
Both federal and state securities laws prohibit stockbrokers from making false statements or otherwise failing to accurately disclose information about investments. This includes not only outright inaccurate claims but failure to disclose pertinent information that may affect a client’s decision about a securities purchase. When stockbrokers violate these laws, they generally do so in an attempt at personal gain, such as manipulating the market. Corporations generally make such misrepresentations in order to over-represent their profits.
When your stockbroker or a corporation misrepresents or omits information that could affect your decision to invest, it is a serious breach of trust that could cause significant financial losses and even threaten your future financial security.
The Sarbanes-Oxley Act
In the wake of a several serious accounting scandals that dominated the media, Congress enacted the Sarbanes-Oxley Act of 2002, which increased financial disclosure requirements and introduced other reforms to provide a stronger regulatory structure to protect individual investors’ interests.
While these new regulations make the market safer and more accountable to consumers to establish a case, investors still must show that unsuitable investments were made based on a reliance on incomplete or misleading information. This could include direct evidence such as a written statement misrepresenting an investment, or indirect evidence, such as an exaggerated stock price, which could affect an investor’s impressions of its true value.
To determine whether you have a claim against your stock broker, please contact our experienced securities fraud attorneys. We’ll evaluate your claim for free and fight to get your money back.