Investors depend on stockbrokers and financial advisors for accurate, complete information about the products they recommend. When a professional misstates a material fact or leaves out information you need, the result can be losses. Those losses may put your financial goals at risk.
Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, helps investors evaluate whether misrepresentation or omission caused harm. We also explain what recovery options may be available.
Our partners are former Wall Street defense attorneys who now represent individual investors. That background gives us insight into how broker-dealers and their firms defend these cases, and it shapes how we prepare claims on your behalf. If you believe your losses were caused by false or incomplete information, call 1-888-885-7162 for a free case review.
What misrepresentation and omission mean
A misrepresentation is a false, misleading, or incomplete statement about a material fact. An omission is the failure to disclose a material fact that an investor would reasonably need to make an informed decision. Both can involve negligence, where a broker simply did not do the required research, or intentional conduct that rises to the level of fraud.
A fact is material when a reasonable investor would consider it important. Examples include the risks of an investment, hidden fees or surrender charges, and the liquidity of the product. They also include conflicts of interest and whether the advisor has a financial incentive to recommend the product. Brokers and advisory firms have duties under industry rules to make sure clients receive accurate and balanced information.
Common examples of misrepresentation and omission
| Type of issue | What an investor might hear or not hear | Why it matters |
|---|---|---|
| Overstated performance | The advisor promises above-market returns with little or no risk. | Investors may commit money based on returns that were never realistic. |
| Hidden fees | The advisor does not disclose commissions, surrender charges, or ongoing costs. | Fees can erode principal and reduce the actual return. |
| Undisclosed risk | The advisor describes the product as safe but omits concentration or market risk. | The investor may face losses larger than expected. |
| Conflict of interest | The advisor fails to explain a higher commission or compensation arrangement. | The recommendation may serve the advisor rather than the client. |
| Misstated liquidity | The advisor says the investment is easy to sell when redemptions are restricted. | The investor may be unable to access funds when needed. |
How these claims violate industry rules
Misrepresentation and omission can violate several regulatory and legal standards. The Financial Industry Regulatory Authority, or FINRA, requires communications with the public to be fair, balanced, and not misleading under FINRA Rule 2210. The suitability rule, FINRA Rule 2111, requires brokers to have a reasonable basis for recommendations and to understand the products they sell. These obligations include giving clients the information they need.
Investment advisers are also subject to anti-fraud provisions under the Investment Advisers Act of 1940, described on the Securities and Exchange Commission (SEC) website. A registered investment adviser who omits or misstates a material fact may breach the fiduciary duty owed to the client. For brokers, conduct that misleads a customer can also constitute a breach of fiduciary duty depending on the relationship and the facts.
Warning signs that may indicate a problem
Misrepresentation and omission are not always obvious at first. Losses may take time to appear, especially when hidden fees or illiquid products are involved. The following warning signs can help investors decide whether to investigate further.
| Warning sign | What to look for |
|---|---|
| Returns that sound too good to be true | Written disclosures show higher risk or lower expected return than the advisor described. |
| Unexpected fees on statements | Fees appear that were not discussed when the investment was recommended. |
| Pressure to act immediately | The advisor discourages questions or review of documents before investing. |
| Statements that conflict with advice | Account documents do not match the advisor’s oral explanations. |
| Difficulty getting answers | The advisor or firm avoids written confirmation of key facts. |
Steps to take if you suspect misrepresentation or omission
If you think a broker or advisor misled you or hid important information, acting quickly can protect your rights. Gather account statements, trade confirmations, emails, marketing materials, and notes from conversations. Compare what the advisor told you with what the written documents say. This comparison often shows whether a statement was false or whether important facts were left out.
Request a written explanation from the advisor or the firm’s compliance department. A written response can clarify the firm’s position and may become useful later. You can also file a complaint with FINRA or the Securities and Exchange Commission, or SEC, through their investor complaint portals. These agencies can investigate whether rules were broken, though they do not recover money for individual investors in most cases.
How we help investors pursue recovery
Our firm has represented investors in a wide range of misrepresentation and omission matters. Our attorneys include former Wall Street defense lawyers who understand how broker-dealers build their defenses. We use that experience to investigate the facts, identify the responsible parties, and present claims in FINRA arbitration or other appropriate forums.
Our firm works on a contingency fee basis. That means you pay no attorney fee unless we recover money for you. We have more than 95 years of combined attorney experience and a 98% success rate.
We have also been involved in cases totaling more than $520 million in securities matters. Those numbers reflect our past work, not a guarantee of any specific result in your case.
Every case is different. Some investors resolve matters through negotiated settlements. Others proceed to arbitration or litigation. The best path depends on the facts, the firm involved, the strength of the evidence, and the damages at issue.
If you have questions about whether you have a claim, our investment fraud attorneys can review whether you can sue a stockbroker. We can also explain what forums may apply.
Frequently asked questions
What is the difference between misrepresentation and omission?
Misrepresentation involves making a false or misleading statement. Omission involves leaving out a material fact that an investor needs to make an informed decision.
Can I recover losses if my advisor did not tell me about fees?
If the undisclosed fees were material and caused your losses, you may have a claim. An attorney can review your statements and disclosures to assess whether the omission supports a recovery.
Does a bad investment result automatically mean there was misrepresentation?
No. Markets can decline and investments can lose value even when all material facts were disclosed. A claim requires more than a poor outcome.
What rules govern broker communications about investments?
FINRA Rule 2210 requires broker communications to be fair, balanced, and not misleading. FINRA Rule 2111 requires recommendations to be suitable based on the investor’s profile and the product’s risks.
How long do I have to bring a claim?
Time limits depend on the forum, the claims asserted, and the facts of your case. FINRA arbitration claims generally must be filed within six years of the event, but other deadlines may apply. Speak with an attorney promptly to protect your rights.
What should I bring to a free case review?
Bring or send account statements, trade confirmations, marketing materials, correspondence with your advisor, and any notes from conversations. These documents help us evaluate whether misrepresentation or omission occurred.
If you believe a financial professional misled you or hid facts that affected your investments, call 1-888-885-7162 for a free case review. Our attorneys will listen to your story, review the available documents, and explain your options.
This page is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes.