Misrepresentation & Omission

A misrepresentation occurs when a broker intentionally or unintentionally misrepresents the risks of an investment. An omission occurs when a broker intentionally or unintentionally fails to disclose information that the broker knew or should have known that the client would rely on regarding the risks of the investment. Generally speaking, the client must have reasonably relied on the broker’s misrepresentation or omission and must have made his decision to buy or sell the security based on the broker’s conduct. The client’s reliance should be reasonable based on his sophistication with securities, the availability of relevant information, his relationship with the broker, and other factors.