Securities Fraud

What Is Securities Fraud?

Most of the claims an investor can make against his/her stockbroker or financial advisor that are discussed on this law firm website are types of securities fraud. In general, securities fraud by a financial advisor occurs when a broker or advisor uses an investment account to defraud, or obtain money from clients by means of untrue statements of material facts and/or failure to state material facts. This violates federal securities law (in particular, Section 10(b) of the U.S. Securities Exchange Act of 1934 and Rule 10b-5) and may also violate state securities acts.

If you believe that you are a victim of securities fraud through the acts of your financial advisor, you should contact one of our attorneys as soon as possible.

If a broker / advisor makes false statements to an investor or fails to advise the investor of certain important facts, the investor may be able to recover losses incurred resulting from this fraud. Fundamentally, a broker / financial advisor must be truthful when discussing certain investments with their customers, and when making recommendations of securities. In addition to being truthful, the broker / advisor must disclose “material” (i.e. important) facts. Many FINRA arbitration cases involve a broker / advisor who has recommended an investment, yet failed to disclose the risks of the investment to the customer, or outright misstated the risks of the securities investment (for example, telling the customer a high-risk investment was low risk or no risk).

Investors should always be skeptical if a financial advisor describes an investment as low risk but with a high return. Investments that pay high income or have a high return almost always will have higher risk than other investments with a lower return.

An example of securities fraud under state laws (based on the Uniform Securities Act), is the Virginia Securities Act, Va. Code § 13.1-522, which prohibits the sale of a security “by means of an untrue statement of a material fact or any omission to state a material fact necessary in order to make the statement made, in the light of the circumstances under which they were made, not misleading…”

The Virginia Securities Act further makes it unlawful to sell a security while employing “any device, scheme or artifice to defraud.” Va. Code § 13.1-502. The Virginia Securities Act, along with most other state securities Acts, provide for a recovery of reasonable attorneys’ fees and interest in addition to a customer’s damages.

Most of the hundreds of public customer FINRA arbitration claims the lawyers at Greco & Greco have filed over the years have involved some aspect of securities fraud. If you believe that your stockbroker / financial advisor or brokerage firm has fraudulently misstated facts, or failed to disclose important facts or risks, with regard to stocks, bonds, funds, private placements, REITs, or other investments or securities strategies to you, please contact Scott Greco for a free attorney consultation.

Our Virginia securities fraud lawyers represent individuals from all states across the country and have decades of experience protecting the rights of customers, and holding securities firms responsible for the acts of their brokers.