The Law Offices of Justin London helps clients who have lost money in securities due to fraud, misrepresentation, and breach of fiduciary duty. Brokers and advisors that sell securities or make financial recommendations owe their clients the highest level of trust and loyalty. Material statements that are false which induce an investor to invest in securities that either are not suitable or which cause an investor to lose money can lead to liability for the broker or advisor that made them.
To establish common law fraud, typically a victim must establish through particular and specific allegations that (1) a statement was made by the defendant; (2) of a material nature as opposed to opinion; (3) that was untrue; (4) that was known or believed by the speaker to be untrue or made in culpable ignorance of its truth or falsity; (5) that was justifiably relied on by the plaintiff to his detriment; (6) made for the purpose of inducing reliance; and (7) such reliance led to the plaintiff's injury, e.g. investment losses. As an investment fraud lawyer provider firm, the Law Offices of Justin London ensures that the investment fraud attorney handles the case efficiently.
The Investment Advisors Act of 1940 and the Securities Exchange Act of 1934 protects investors from fraudulent misconduct by brokers and advisors. Investors should check their investment statements and accounts regularly for irregularities and only open brokerage accounts with well-established financial institutions and brokerages. Investors who lose money can initiate claims against their broker or financial institution by submitting a claim through FINRA which provides arbitration and dispute resolution services.
Although the Securities Act of 1933 prohibited fraudulent sales of securities, no regulation precluded fraudulent purchases. Rule 10b-5, issued by the SEC under section 10b of the Exchange Act, was implemented to fill this regulatory void.
Rule 10b-5: Employment of Manipulative and Deceptive Practices
"It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
- (a) To employ any device, scheme, or artifice to defraud,
- (b) To make any untrue statement of a material fact or to omit to state a material fact necessary
- in order to make the statements made, in the light of the circumstances under which they were
- made, not misleading, or
- (c) To engage in any act, practice, or course of business which operates or would operate as a
- fraud or deceit upon any person,
in connection with the purchase or sale of any security."
In the case of TSC Industries, Inc. v. Northway, Inc., the word "material" was defined by the U.S. Supreme Court - "an omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote." 426 U.S. 438, 449.
Some investment contracts in condo-hotels and viatical settlements can be treated like securities and be subject to regulations under the Securities Exchange Act of 1934 if the broker discusses investment returns, risks, and rewards. Thus, victims who sustain losses as a result of misrepresentations of fraud in vehicles or products that might traditionally fall under real-estate or insurance contracts, may be able to sustain causes of action for securities violations.
Contact the Law Offices of Justin London at (773) 528-1433 if you have sustained financial losses as a result of investment fraud.