Misrepresentation is a type of securities fraud where an investment professional makes a false or misleading statement in relation to the sale of a security. The false statement may relate to a particular stock, an account or an investment practice. Misrepresentation may involve a false statement about a stock’s prior performance. The investment professional may reference market research that does not exist or imply inside information that is not available. Sometimes, the investment professional will create “statements” that misstate the actual account value. He or she may be using margin accounts and then mislead the investor as to the use of a margin account.
Misrepresentations may be made orally or in writing. Whenever a brokerage statement differs from a statement from an investment professional or the investment professional tells an investor he or she does not need to see a statement, the investor should consult an investment fraud attorney. The longer a fraud is permitted to persist, the more difficult it is to obtain a full recovery.