Fraud, Omissions, Misrepresentations
- What Is Fraud?
- What Is an Omission?
- What Is a Misrepresentation?
- How Can I Prove That My Broker/Advisor Engaged in Fraud?
- What Are Common Signs That My Broker/Advisor Has Engaged in Fraud?
- What Should I Do if It Seems My Broker/Advisor Engaged in Fraud?
Generally, fraud refers to an intentionally deceitful act that is intended to take advantage of an unsuspecting party. Fraud comes in many forms, ranging from false affirmative statements to intentionally misleading statements to conscious omissions. Fraud is a civil and criminal violation of both state and federal laws.
While fraud is commonly carried out by making some kind of misleading affirmative statement, fraud can also result from the failure to disclose certain information. Fraud by omission occurs when a party knows of and omits material information that it knows the opposing party does not have or cannot ascertain.
A misrepresentation is typically a false statement about a material fact that is intended to be taken as truth and influence another. Misrepresentations fall into three main categories: innocent misrepresentation, negligent misrepresentation, and fraudulent misrepresentation. The circumstances of the misrepresentation will dictate the potential claims available to an investor.
To successfully bring a claim for fraud, the victim must typically prove the following elements: (1) the making of a statement that is materially false/misleading OR the omitting of a material fact, (2) an intent by the fraudulent actor to deceive (scienter), (3) reasonable reliance on the false/misrepresented/omitted fact by the victim, and (4) injury sustained by the victim due to such reliance.
Fraud conducted by brokers/advisors can come in many different shapes and sizes. For example, if your broker intentionally misrepresents or fails to tell you about the risks associated with a particular investment, such statements or omissions might constitute fraud. If all the investments in your portfolio seem to move differently than the overall market or perform differently than your broker/advisor explained, your broker/advisor may have engaged in fraud. Fraud also comes in more blatant or common forms, such as Ponzi Schemes, pump-and-dump schemes, and embezzlement.
If any of the conduct mentioned above has occurred in your relationship with your broker/advisor, it is highly recommended that you consult counsel that is highly experienced in investment fraud matters, like the lawyers working at Malecki Law, to review the merits of your claim and to help file a claim.