The primary role of an investment broker is to protect his or her clients’ financial interests by researching and recommending stocks that are appropriate for each client’s investment goals, risk tolerance, and level of financial sophistication.
Broker Misrepresentations and Omissions
Honesty is a key element to a broker’s responsibility to his or her clients. An investment broker should always ensure that his or her clients are familiar with the nature of their investments, including any inherent risks and potential for profit.
If your broker has intentionally misrepresented individual investments or an overall investment strategy to you, either by making false claims, or by leaving out pertinent information, you may be able to sue to recover your losses.
Federal laws as well as many state laws prohibit stockbrokers from making knowingly false statements about investments or failing to disclose pertinent information; and most brokers are meticulous about educating their clients as to the potential risks and other relevant information about their investments. However, in some cases, unethical brokers and brokerage houses will deceptively market unsuitable investments as a means to further their own goals.
Corporate Misrepresentations and Omissions
In some cases, it is the companies themselves that misrepresent their financial status and risks, rather than the brokers. In cases such as these, company officials may falsify data or omit relevant information relating to the financial health of their company, in order to attract investors and secure their own financial interests.
Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 was enacted in the wake of a series of accounting scandals that dominated the media. This act requires that corporations disclose their financial data in greater detail than they were previously required to; and introduces a number of other financial reforms that are intended to make it easier for consumers to evaluate the financial health of the corporations they are considering investing in.
What You Can Do
If you or a family member suffered from market losses as a result of outright misrepresentation, or failure to disclose pertinent information about your investments, you may be able to sue the responsible party to recover some or all of the losses you accrued as a result.
Establishing a case, however, can be difficult, and you may have a limited amount of time to bring a claim. That’s why it is important that you seek the advice of an experienced securities attorney in your area as soon as possible. He or she can review your case and your portfolio with you in detail, and help you determine how best to recover damages and secure your family’s financial future.
