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As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
A classic type of securities fraud is omission. When a broker is trying to sell an investment deal to a client, it is easier to omit risks associated with the deal rather than to misrepresent facts outright. However, under the law, there is no difference between omission and misrepresentation. If you have suffered a financial loss due to omission of material facts, you could be entitled to damages. Dietrich P. Epperson, Attorney at Law, aggressively represents investors who have been victims of omission so that they can receive just compensation for their financial losses.
What is Omission?
A broker is liable for omission when he or she fails to disclose a material fact about an investment. Material facts are pieces of information that a reasonable person would want to know before making a decision to buy or sell securities. Whether a fact is considered material or not depends on the nature of the security in the transaction. Some common examples of omission in trade deals include:
- Broker presents investor with a positive report regarding an investment with the knowledge that the company is going to file for bankruptcy soon
- Failure to disclose fees associated with an investment
- Failure to disclose material risks of an investment
- Failure to disclose the disadvantage of a security
According to the U.S. Securities Exchange Commission, an investor who has suffered financial loss due to misrepresentation or omission must show:
- The omission was of material fact;
- The omission was intentional, reckless;
- The omission was made by the broker in connection with the purchase or sale of a security;
- The investor relied upon the omission; and
- The investor’s reliance on the omission resulted in financial loss
How do I Avoid Financial Loss Due to Omission?
The primary method of avoiding financial loss by omission is to stay as involved as possible in your security transactions. Asking questions during the purchase and sale process will keep brokers on their toes if they happen to be withholding information. Other ways to avoid falling victim to omission include:
- Research your broker and firm
- Stay up to date with market fluctuations and trends
- Read about your investments prior to buying or selling
- Do not make decisions based solely on the advice of your broker
- Ask as many questions as possible during the buying and selling process
- Check your account statements frequently
- If you feel uneasy about a broker, hire a new one
- If an investment makes you feel uneasy, do not hesitate to cash out
If you have already suffered financial loss due to an omission by your broker, it is important for you to take action and organize all documents related to the transaction. This is necessary if you are going to file a claim for your case to be heard in a FINRA forum. Some necessary documents include:
- Written notes of conversations with your broker
- Account statements
- Confirmation of transactions
- Copies of correspondence between you and your broker
- Any written documents your broker gave to you
- Research material provided to you by your broker
In order for your claim to be eligible for FINRA arbitration, you must file within six years of the events giving rise to the claim. Two documents must be filed so that FINRA arbitration can commence:
- Statement of Claim
- FINRA Submission Agreement
The statement of claim describes the dispute, identifies parties to the dispute, and addresses the type of relief that is requested. Some examples of relief that you may request include interest, specific performance, and monetary damages. The FINRA submission agreement also names the parties to the dispute. It acknowledges that FINRA is the organization that will conduct the proceedings, and if a hearing is held, the final ruling will be binding.
There are many advantages to choosing FINRA arbitration over traditional litigation. Typically, FINRA arbitration is less expensive and time consuming than litigation. Parties are permitted to pick the arbitrator or panel of arbitrators, and the final decision is binding. Many people who have been parties in FINRA arbitration cases have found that arbitrators are more business-like than jurors who are not as investor-friendly. It important for investors to remember that once a case is arbitrated, the parties are barred from pursuing the same claims through the court system.
If you have suffered financial loss due to omission of material fact by a broker, you may be entitled to damages. Do not wait any longer to contact an omission attorney. Retaining a skilled, experienced FINRA arbitration attorney is a necessary step in ensuring that you are placed in an optimal position to receive just compensation for your loss. Dietrich P. Epperson, Attorney at Law, serves the Delaware County and greater Philadelphia areas, and on a national level, has experience in FINRA arbitration. Call the office of Dietrich P. Epperson, Attorney at Law today at (877) 445-9261 and schedule a free and confidential consultation with an attorney you can trust to fight for you.