Have you suffered losses on an investment because your broker’s or brokerage firm’s failure to disclose certain material information that would have influenced your decisions? If so, you may have a legal claim to recover those losses. Contact Erez Law PLLC for an initial case review to learn how our firm can help you pursue the money and accountability you deserve.
How Our Investment Fraud Lawyers Can Help You
The legal team at Erez Law PLLC can help you demand compensation for your investment losses by:
- Investigating your claim and gathering evidence to prove that your broker failed to disclose material information, which prevented you from making an informed investment decision
- Documenting investment losses and excessive fees or commissions you incurred
- Working with economic experts to prove your losses
- Negotiating with brokers and brokerage firms to pursue a favorable settlement
- Filing a statement of claim to pursue financial recovery in arbitration through the Financial Industry Regulatory Authority (FINRA), if necessary
Our attorneys have over 35 years of experience representing investors in claims of broker negligence or misconduct. We have recovered over $200 million in claims, including more than 50 FINRA arbitration cases tried in arbitration hearings.
What Does Failure to Disclose Mean in Investments?
Investment brokers and financial services firms have an affirmative duty to provide their clients with all material information necessary for those clients to make informed decisions about whether to put their money in a specific investment or to adopt a particular investment strategy.
Brokers also have a duty to select investments suitable for a client’s investment objectives, financial needs, and risk tolerance. When a broker negligently or intentionally withholds material information about a proposed investment from a client, that failure to disclose can lead to liability for a broker.
Common Facts and Risks Brokers Fail to Disclose
There are many reasons a broker might fail to disclose material information about an investment opportunity to their client, from simple thoughtlessness to an unscrupulous desire to profit from the client’s lack of knowledge about a particular investment. Examples of material information about investments that brokers may fail to disclose include:
- Investment fees or commissions that the broker will earn on the investment
- The level of financial risk posed by an investment, including the current financial condition of the enterprise underlying the investment
- The expected performance of the investment across various scenarios, including worst-case scenarios and scenarios under historical trends
- Potential drawbacks of the investment, such as a lack of a liquid market to resell the securities
- Conflicts of interest the broker has with an investment or the underlying enterprise, such as the broker having personal or professional relationships with the enterprise’s principals, or the brokerage firm having a financial interest in the enterprise
- How much the risk of an investment deviates from the client’s investment strategy or expressed risk tolerance
If your broker failed to disclose such information, their brokerage firm could be held liable for the losses you incurred.
How Nondisclosure Harms Investors
When brokers or firms fail to state material facts or provide investors with complete disclosures of material information about an investment, their clients may invest their money in a company or security that does not align with their financial objectives or risk tolerance. As a result, clients who invest without having all material information at their disposal may lose money in risky or speculative investments they would not have invested in had they received a full disclosure of material facts.
Clients can also suffer other losses from an uninformed investment, such as excessive administrative fees or broker commissions that a broker or firm failed to disclose to them.
As another example of potential harm, an investor may invest their funds in an asset that lacks a liquid market, leaving them unable to mitigate losses or sell securities promptly. Because of the failure to disclose material information about their investment decisions, investors may find themselves
unable to liquidate their investment or pursue other opportunities in a timely manner. The stress of losing money in a poor investment or being trapped and unable to cut their investment losses can cause substantial emotional distress and irreparable damage to the investor’s professional relationship with a broker or firm.
Furthermore, investors who are misled into putting their money in risky, speculative investments may suffer long-term damage to their financial security, as they may lose a substantial portion of the wealth they’ve accumulated to support themselves during retirement.
Recognizing Signs of Misrepresentation or Omission
There are some common red flags that may signal when a broker or investment firm has failed to disclose material facts, misrepresented details of a proposed investment, or is misleading investors. Consider seeking legal help if you notice any of the following:
- Your account is experiencing excessive or unexplained losses, including those that your broker did not warn you about.
- An investment never reaches the level of returns promised by the broker.
- You incur unexpected investment fees, management expenses, or broker commissions.
- You read or hear news about financial troubles for a company you’ve invested in, and your broker never disclosed any financial issues.
- Your broker promotes investments with guaranteed high returns or “risk-free” investments.
- Your broker promotes complex investment strategies without adequately explaining how a strategy works or the risks of an investment.
- Your broker fails to answer your calls or respond to your voicemails, emails, or text messages.
- A broker brushes off your concerns or questions or becomes defensive or agitated when you raise issues about a proposed investment.
Contact Our Investment Fraud Lawyers for Help
Have you lost money because an investment broker negligently or knowingly failed to provide all relevant facts for you to make an informed decision about whether to put your money in an investment? If so, you may have a legal claim against that party. Contact Erez Law PLLC today for a confidential consultation with a failure to disclose material facts lawyer. We will discuss your legal options for holding your broker or financial advisor accountable for the harm you’ve suffered because of their actions.