Securities fraud is an especially difficult crime to catch and prosecute. It is difficult for any observer to really judge whether a significant loss was due to natural market fluctuations or due to being given bad or misleading information. In general, people tend to follow their brokers’ advice without seriously questioning its provenance – unless they experience a sizable loss. It may require the help of a Clearwater securities litigation attorney to determine whether you have been the victim of securities fraud.

Proving Fraud

One of the key aspects of securities fraud is that the broker must have intentionally or recklessly misrepresented a material fact that led a customer to make an investment decision that resulted in damages. In other words, if you have lost money because you relied on information given to you by your broker, and your broker either knew or should have known that the information was not true, you and your Clearwater securities litigation attorney may have a case for securities fraud. In some cases, the investor must be able to show that he or she relied on the misrepresentation. For example, a statement in a prospectus that mentions the existence of a lucrative contract may be used as evidence, provided the investor can also show that his or her decision was based on learning that information.

Fraud by Omission

A similar crime that your Clearwater securities litigation attorney might investigate is fraud by omission. This is when information is hidden from the investor that he or she otherwise would be expected to learn in order to make an informed decision. For example, if a prospectus omits the fact that the issuer is engaged in ongoing patent litigation regarding a key piece of intellectual property, an investor may have a case for fraud by omission because the omitted information may reasonably be expected to influence an investor’s decision whether to invest in a company. In contrast with the above type of fraud, in this case, it is automatically assumed that the investor would have relied on the information to make the decision; the plaintiff does not need to prove reliance. However, a defendant in a securities fraud claim may try to show that the omission did not matter and that the plaintiff would have made the same decision regardless.

Telltale Signs of Fraud

If you are beginning to suspect that you cannot trust your broker, be on the lookout for these signs of investment fraud:

• Your broker has stopped communicating with you.
• Your broker discourages you from watching the financial news closely.
• Your broker begins trading in several high-risk investments.
• Your broker fails to disclose certain pertinent information about your investments.
• You see vastly different results than the market as a whole.

What To Do Next

Securities fraud is difficult to investigate and prove, but that doesn’t mean you should just let it go unchecked. For more information on how securities fraud is prosecuted, contact a Clearwater securities litigation attorney. Mr. Coleman and the Coleman Law Firm can be reached by calling (727) 461-7474.