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Do You Have a Claim for Investment Advisor Fraud Based on a Misrepresentation or Omission?

When you hire an investment advisor, you expect your advisor to tell you what you need to know in order to make informed investment decisions. Not only is this expectation reasonable, but it is also your entitlement under the law. Investment advisors have a legal duty to give investors the information they need, and when they make misrepresentations or omissions, they can (and should) be held accountable for their clients’ losses.

If you believe that you have suffered investment losses due to a misrepresentation or omission made by your investment advisor, you should consult with a lawyer promptly. You may be entitled to recover your losses, and if you are, you can hire a lawyer to represent you at no out-of-pocket cost. Your lawyer can file a claim on your behalf in FINRA arbitration, and your lawyer can use the arbitration process to gather any evidence needed to prove your investment advisor’s misconduct.

Proving Fraud Based on a Misrepresentation or Omission

Proving that you are a victim of securities fraud requires more than just evidence of a false or misleading statement. Like all types of fraud claims, those based on misrepresentations and omissions require proof of several “elements.” Unfortunately, not all misstatements rise to the level of actionable fraud under federal securities laws, and some unscrupulous advisors will use this to their advantage.

But, many investment advisors cross the line—whether knowingly or unknowingly. Under the federal securities laws that protect retail investors, an investment advisor’s misrepresentation or omission constitutes actionable fraud if:

  • The misrepresentation or omission involved a material fact. A fact is considered “material” if it would be important to a reasonably prudent investor’s decision to move forward with a particular securities transaction.
  • The misrepresentation or omission was intentional or reckless. While evidence of intent can justify a claim for investment advisor fraud, it is enough if your lawyer can prove that your advisor acted recklessly.
  • The misrepresentation or omission was made in connection with the purchase or sale of a security. You must be able to use the timing or a particular transaction or other evidence to show that you relied on the information your investment advisor provided.
  • The misrepresentation or omission resulted in an investment loss. Finally, your lawyer must be able to prove that the misrepresentation or omission resulted in a realized investment loss. Even if there is no question that your investment advisor deceived you, you don’t have a claim unless you have financial losses that you need to recover.

When you contact Zamansky LLC for a free initial consultation, one of our lawyers will thoroughly examine the facts of your case to determine if you have a claim for fraud. If it appears that you may have a claim, we can work quickly to gather any additional information needed, and we can rely on our decades of experience successfully representing defrauded investors to effectively pursue your claim in FINRA arbitration.

When is a Misrepresentation or Omission of Fact Considered “Reckless”?

While presenting evidence of intent is one way to establish a fraud claim in FINRA arbitration, investment advisors can also be held liable for making reckless misrepresentations and omissions. This is crucial—while many investors assume that the concept of “fraud” necessarily involves intent to deceive, this is not the case. If you suffered investment losses because your investment advisor was reckless, this entitles you to recover your losses through the arbitration process.

So, when is a misrepresentation or omission of fact considered “reckless”? Some common examples of investment advisor recklessness include:

  • Making investment recommendations without conducting adequate due diligence
  • Making unrealistic assumptions when preparing investment projections
  • Inaccurately calculating a security’s past or anticipated future performance
  • Failing to disclose all of the material risks that an investment entails
  • Failing to disclose all of the costs related to a proposed investment transaction

All of these forms of recklessness (among others) violate investment advisors’ duties under the Investment Adviser Act of 1940 and various other federal securities laws and regulations; and, as such, they constitute sales practice violations under FINRA’s rules. This means that they clearly support claims for damages in FINRA arbitration.

Frequently Asked Questions (FAQs): Recovering Investment Losses Caused By Misrepresentations and Omissions of Fact

Can I file a claim against my investment advisor if my advisor withheld information about the costs involved with an investment he or she recommended?

Withholding information about the costs associated with a recommended transaction is a classic example of investment advisor fraud. Oftentimes, the costs associated with investment transactions can be substantial, and they can lead to losses from what would have otherwise been a profitable investment (which is why investment advisors often don’t disclose them). If you have recently discovered that the fees you paid to your advisor resulted in a net loss from an investment that he or she recommended, you should consult with a lawyer promptly.

My investment advisor recommended investing in a private placement that turned out to be a Ponzi scheme. Can I sue my advisor, or do I have to try to go after the company?

This is an example of a scenario in which you may have a claim against your investment advisor based on recklessness. If your advisor overlooked red flags which signaled that the investment may not have been legitimate, this could justify a claim to recover your losses in FINRA arbitration.

How Do I determine if I have a claim based on a misrepresentation or omission of fact?

Determining if you have an investment fraud claim based on a misrepresentation or omission of fact isn’t easy. To determine what options you have available, you should consult with a lawyer promptly.

Discuss Your Investment Advisor Fraud Claim with a Lawyer at Zamansky LLC

Do you have questions about filing an investment fraud claim based on a misrepresentation or omission of fact? If so, we encourage you to speak with a lawyer at Zamansky LLC. To schedule a free and confidential consultation as soon as possible, call 212-742-1414 or tell us how we can reach you online now.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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