Misrepresentation
and Omission

Alabama, Georgia, Florida

Obligation of Truth
Maybe your stockbroker told you your stock is a guaranteed winner, or that it will reach a certain amount by Friday. But it didn't.

By law, your broker isn't allowed to misrepresent facts, make false statements, or omit information about your investment that causes you to lose money. Your broker is obligated to be truthful and accurately disclose any risks or fees that you should be aware of. Common misrepresentations arise when a broker tries to downplay the risks or play up the benefits associated with your investment.

The Inside Scoop
A broker must present the facts about your investment and allow you to assess the risk and reward before exposing your capital to the market. It's fraudulent for your broker to tell you they have the 'inside scoop' and are positive your stock will go up, if they have nothing to base their statement on. Or, if your broker does have inside information that has not been made public and leaks it, there are other penalties involved in addition to fraud.

Securities Act
The Securities Act of 1933 prohibits misrepresentation with the buying and selling of securities. Besides brokers, corporations can also omit facts or distort financial information. If a company under-reports its liabilities or overestimates its assets, which leads you to believe the corporation is more profitable than it is, and you act accordingly-this is also fraud (called accounting fraud).

The National Association of Securities Dealers (NASD) requires its members to send their clients account statements once every quarter. These statements include:

• Purchases
• Interest
• Any charges or credits
• Dividend payments
• Transfer activities
• Securities receipts or deliveries
• Journal entries detailing funds or securities controlled by the broker

All of these documents must be accurate and complete. If your broker fails to tell you about any of the following, he or she may be held liable for your losses:

• Sales charges
• Your investment risk
• Ways that broker commissions can be lowered
• Surrender charges or backend commissions

If you or a loved one has been victimized by misrepresentation or omission fraud, please contact our stockbroker malpractice attorneys Burke, Harvey & Frankowski. We are dedicated to protecting the people of Alabama, Georgia and Florida, and can help you collect the damages you legally deserve. Call or e-mail us today for a free consultation.

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