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Misrepresentations & Omissions

A brokerage firm is a fiduciary of the customer. The firm's fiduciary duty requires the disclosure to the customer of all material facts. False representations of a material fact give rise to a claim for misrepresentations. Similarly, the firm has a duty to inform a customer of all facts that may be important to the customer in the purchase, sale or decision to hold a security, The failure to provide all material information to the customer constitutes an omission.

Material facts may include those that have a bearing on the quality of the investment, risk factors involved in the investment, background of the company or executives or company financials.

A brokerage firm may be held liable if the firm misrepresents or omits material facts and the client loses money.