What Counts as Misrepresentation or Omission?
What was left out can matter as much as what was said. A product pitched on its upside, with the lock-up period, the leverage, or the possibility of total loss never mentioned, was not honestly presented — whether the omission was deliberate or careless.
Securities law imposes a duty on brokers to provide full, fair, and balanced disclosure of material facts. A "material" fact is anything a reasonable investor would consider important in making an investment decision. Failing to disclose material information — or affirmatively misrepresenting it — violates federal securities law, FINRA rules, and state common law.
Warning Signs
Surprise Risks
Risks you only discovered after the investment lost value — risks that were never discussed.
False Safety Claims
An investment described as "guaranteed," "safe," or "like a CD" that was none of those things.
Hidden Fees
Fees, surrender charges, or commissions never explained up front.
Documents Don't Match
Documents you signed that do not match what you were told verbally.
Common Examples
- Describing speculative investments as "safe" or "guaranteed" — no investment is truly guaranteed, and using this language to sell a risky product is a textbook misrepresentation
- Omitting surrender charges or lock-up periods — selling an illiquid product without disclosing that the investor cannot access their money for years
- Concealing conflicts of interest — failing to disclose that the broker receives higher compensation for selling certain products
- Misrepresenting historical performance — showing hypothetical or back-tested returns as if they were actual past performance
- Omitting material risks — failing to disclose that a product uses leverage, concentration, or other risk-amplifying strategies
The Legal Framework
Claims for misrepresentation and omission arise under multiple legal theories:
- Federal securities law (Rule 10b-5): Prohibits any "untrue statement of a material fact" or omission of a material fact "necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading"
- FINRA Rule 2020: Prohibits a member firm or associated person from effecting transactions by means of "any manipulative, deceptive or other fraudulent device or contrivance"
- State common law fraud and negligent misrepresentation: Provides additional avenues for recovery under the laws of your state
Were you told something that wasn't true — or not told something that mattered?
We examine what was said (and what wasn't) to build the strongest possible case. Free, confidential review.
Request a Free Case Review Call 954-464-3739Frequently Asked Questions
An omission of a material fact can be just as actionable as an affirmative lie. If your broker failed to disclose information that would have changed your investment decision, that omission may support a claim.
While written documentation is helpful, it is not required. Arbitration panels regularly hear testimony about verbal representations. Your broker's own internal notes, emails, and the firm's marketing materials can also be powerful evidence.
You may recover your net out-of-pocket losses, lost opportunity costs (what you would have earned in a suitable investment), interest, and in some cases punitive damages and attorney's fees.