How could a broker misrepresent an investment?


Many people agree that investing involves risk. The extent of your vulnerability can vary depending on the situation. But can you always trust your broker to guide you toward a good option?

Brokers are trained and licensed to guide you in making wise investment decisions according to your goals. Unfortunately, misrepresentation of an investment opportunity could devastate your financial future.

However, you can educate yourself about some of the ways a broker could misrepresent your options. And understanding the ways they could take advantage of you may help you avoid unnecessary risk.

Three potential types of misrepresentation

If you make an investment decision due to falsified information, you may have grounds for recourse. Except for their growth predictions and personal opinions, you may hold your broker accountable for withholding details or lying about an opportunity.

As you sign a contract, beware of the possibility of the following ways your broker could lead you astray:

  • Innocent misrepresentation. In some cases, your broker may not know they are disclosing false information when signing your contract. In that case, you may be able to rescind the deal if you become aware of the truth.
  • Negligent misrepresentation. A broker could be negligent in verifying the information they give you, thereby lacking the reasonable care their profession requires.
  • Fraudulent misrepresentation. You may be able to both void your contract and recover damages if your broker knowingly gives you incorrect information.

The legal matters surrounding investments are complex, and your potential compensation involved may vary. However, an experienced broker misconduct attorney could help you recover your financial losses if your broker led you astray.