Churning, Ponzi schemes, “pump and dumps,” and unauthorized trading are just a few of the many ways in which financial professionals defraud investors. Consumers can find protection against fraud in both federal and state statutes, as well as the common law. Federal language, for example, is found in section 10b-5 of the Securities and Exchange Act of 1934, containing a very broad anti-fraud provision that makes it unlawful for any person to “employ any device, scheme, or artifice to defraud . . . in connection with the purchase or sale of any security.” Many state laws (i.e., “blue sky” laws) have adopted similar or identical language.

Claims of fraud against financial professionals typically appear in two forms: misrepresentations (i.e., false statements) and omissions. A financial professional is generally liable for misrepresentations that were made intentionally or recklessly – and under some state laws, even innocently or negligently. Omissions are not representations at all, but rather information about the security that the financial professional should have disclosed to the consumer prior to recommending it. What matters in both instances is that the information misrepresented or omitted would have been considered material – that is, something pertinent that the ordinary investor would have wanted to know prior to making the purchase. In order to bring a successful fraud claim, it is required that you reasonably relied upon the fraudulent statement or omission and that you further suffered financial losses because of it.

If you have suffered an investment loss and believe it was due to fraud, the Law Office of Moshe Y. Singer has attorneys who can help you understand the merits of your case. Call us for a free consultation today. We generally work on a contingency fee basis, meaning we do not get paid unless you recover.