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Misrepresenting or Omitting Material Information Is a Form of Broker Misconduct

As an investor, you have the right to make informed investment decisions. This is true whether you invest on your own or you work with a broker. If you work with a broker, your broker has a legal duty to provide the information you need to make informed decisions—and, if it doesn’t, you may be entitled to financial compensation for broker misconduct.

Our lawyers represent investors in broker misconduct cases nationwide. If you received misleading or incomplete information from your broker—and if you suffered investment losses as a result—recovering your losses may involve taking your broker to FINRA arbitration. We have decades of experience handling FINRA arbitration for investors, and we have secured sizable arbitration awards for numerous clients.

Broker Misconduct: Misrepresenting Material Information

While broker misconduct can take many different forms, misrepresenting material information is undoubtedly among the most common. Brokers may misrepresent various pieces of information that are critical to investors’ investment decisions. For example:

  • Misrepresenting the Nature of an Investment Product – While all investments carry risk, some carry more risk than others. In particular, complex investment products like exchange-traded funds (ETFs) and convertible notes can carry risks that are only suitable for sophisticated and high-net-worth investors. If your broker misrepresented the nature of an investment product in which you were encouraged to invest, you may have a claim.
  • Misrepresenting Investment Risks – You may also have a claim if your broker misrepresented the risks associated with a particular investment. This applies to all types of investments—including common stocks and bonds. If you misunderstood the risks associated with an investment because your broker did not accurately disclose them, you may be entitled to recover your resulting investment losses.
  • Misrepresenting the Broker’s Fees or Commissions – Brokers also have a duty to accurately disclose their fees and commissions. These costs can significantly reduce the upside potential of investing—and this means that they are highly material to investors’ investment decisions. If your broker understated the costs of its services, this could also warrant a broker misconduct claim in FINRA arbitration.

Again, these are just examples. Ultimately, if you suffered investment losses as a result of relying on any misleading information that you received from your broker, you may have a claim. Our lawyers can assess your legal rights free of charge, and if you have grounds to pursue a claim against your broker, we can handle your claim at no out-of-pocket cost to you.

Broker Misconduct: Omitting Material Information

Omitting material information is an extremely common form of broker misconduct as well. Similar to material misrepresentations, material omissions can also take many different forms. Some common examples include:

  • Omitting Information About a Securities Issuer – Understanding the issuer of a security can provide critical insight into the risks that investing in the security entails. When information about an issuer is material to prospective investors (as is generally the case), disclosure of this information is generally required.
  • Omitting Information About Investment Risks – Just as investors can pursue broker misconduct claims for misrepresentations about investment risks, investors can also pursue claims when their brokers omit information about investment risks entirely.
  • Omitting Information About Fees or Commissions – The same is true regarding brokers’ fees and commissions. If your broker withheld information about its own financial interest in a proposed investment, you may have a claim based on a conflict of interest (or broker fraud).

Once again, these are also just examples. If you believe that your broker failed to disclose any material information about an investment that you had a right to know, it will be worth scheduling a free consultation to find out if you have a claim.

Pursuing a Claim for a Broker Misrepresentation or Omission in FINRA Arbitration

If you have a claim against your broker for misrepresenting or omitting material information, holding your broker accountable will most likely involve filing a claim in FINRA arbitration. Brokers are required to register with the Financial Industry Regulatory Authority (FINRA), and, as a condition of registration, they must submit to arbitration for investors’ broker misconduct claims.

To pursue a claim against your broker in FINRA arbitration, you will need proof of your broker’s misrepresentation or omission. With this in mind, it will be important for you to have documentation such as:

  • Your brokerage contract
  • Your brokerage account statements from the period in question
  • Any investment prospectuses or other documents from securities issuers
  • Emails, text messages, and direct messages from your broker
  • Voicemails, voice notes, and other recorded verbal communications

When gathering documentation in support of your material misrepresentation or omission claim, comprehensiveness is key. You do not want to overlook any paper documents, electronic files, or communications you received, as these could potentially be directly relevant to your accusations of broker misconduct. When you hire a lawyer at Zamansky LLC to represent you, your lawyer will assist with evaluating your claim and making an informed decision about whether to proceed.

If you decide to proceed, you will need to be prepared to work closely with your lawyer throughout the process. While you can (and should) rely on your lawyer’s representation, your lawyer will need you to play an active role in the process. While this is true in all types of investment fraud cases, it is especially true in FINRA arbitration proceedings involving allegations that you unknowingly made unsound investment decisions based on inaccurate or incomplete information from your broker. With extensive experience handling these types of cases, we can advise you every step of the way.

Discuss Your Broker Misconduct Claim with an Experienced Lawyer at Zamansky LLC

Do you need to know more about filing a broker misconduct claim based on your broker’s misrepresentation or omission of material information? If so, we invite you to contact us for a free, no-obligation consultation. To discuss your claim with an experienced lawyer at Zamansky LLC in confidence, please call 212-742-1414 or tell us how we can reach you online today.

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