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What Is Misrepresentation by Omission?

When making informed investment decisions, investors need factual information about their potential investments. Financial advisors and stockbrokers are required by law to disclose relevant information about opportunities to those they serve.

Unfortunately, many brokers attempt to push their clients into unwise investments by omitting or misrepresenting material facts. This is typically done to make more sales and acquire higher commissions and fees at the expense of investors’ money and best interests. When financial advisors fail to disclose important information, you need to know your rights.

The experienced securities fraud attorneys at Colling Gilbert Wright are passionate advocates for victims of fraud. If you lost money because an advisor or stockbroker omitted key details related to your investment, you may be entitled to financial compensation under the law.

What Does Misrepresentation by Omission Mean?

In claims of misrepresentation by omission, wronged investors must prove specific legal elements. The elements may differ from jurisdiction to jurisdiction and vary when different types of facts are involved.

Generally speaking, you and your securities fraud attorney must demonstrate the following five elements to bring a successful investment fraud by omission claim:

  1. Your financial advisor concealed or knowingly failed to disclose a material fact
  2. Your financial advisor had a professional duty to disclose that fact
  3. Your financial advisor omitted the fact in order to compel you to take action
  4. You relied on the inadequate disclosures of your financial advisor
  5. You suffered financial losses due to the misrepresentation by omission

It is worth noting that ignorance may not necessarily be used as an excuse by a stockbroker in a case of fraud by misrepresentation. Other factors must also be considered.

For example, you may be able to bring a claim of negligent misrepresentation, which is closely related to a claim of fraud by omission. In cases of negligent misrepresentation, a stockbroker may be held liable if the reason material information was omitted was a failure to conduct due diligence.

Warning Signs Your StockBroker Omitted Material Facts

Consider the following warning signs that your broker or financial advisor may have omitted material facts in your investment dealings:

The Company or Product Is Under Investigation 

If you are investing in a company or product that is suddenly under investigation for fraud, you should take this as a red flag and evaluate your level of risk. Determine what your financial advisor knows and when he or she knew it. You should not sustain financial losses because of a negligent broker’s mistake or misconduct. It is in your best interest to contact a knowledgeable securities fraud attorney right away.

Your Documentation Doesn’t Match What You Were Told

The documentation you receive about your investments should always align with the information you have been told by your investment advisor. If you catch any inconsistencies, there could be a problem. For example, you may discover that your financial advisor failed to disclose certain investment fees. There should be no questions about the details of your investments. Inconsistencies should be addressed and resolved immediately.

Your Financial Losses Exceed What You Thought Was Possible

Oftentimes, investors do not find out about crucial omissions until it is too late. If your broker led you to believe that an investment opportunity was safe, and you went on to suffer tremendous losses, the issue needs to be reviewed closely. What went wrong? Why did your advisor or stockbroker fail to inform you of the possibility of suffering such a huge loss? 

If you were in an unsuitable investment but had no idea because your advisor omitted crucial information about your risk, you deserve justice. Had the omitted information been provided at the right moment, you may not have made the investment.

You Discover Undisclosed Information through Independent Research

When you make an investment, consider conducting your own independent research. Even when you do, you still need guidance from financial professionals, but added confirmation can help protect you and your investment. If while conducting your own research, you happen to uncover any undisclosed information that concerns you, you should follow up on the issue immediately. You may be the victim of misrepresentation by omission. 

Contact Our Securities Fraud Attorneys Today

As an investor, you have rights. If you believe that you sustained a financial loss because of a broker or advisor’s misrepresentation by omission, the securities fraud attorneys at Colling Gilbert Wright want to hear your story. We have extensive knowledge in a range of securities fraud claims, and we have helped many investors obtain the justice they deserve.

See some of our recent cases and investigations.

Don’t delay justice another day. If you are a victim of securities fraud, it is important to act promptly. Call (800) 766-1000 today for a free case evaluation. Colling Gilbert Wright proudly serves clients throughout the state of Florida and Nationwide.