Practice Area

Fraud or Misrepresentation

Name: Altamirano PLLC
Address: 285 Fulton Street, New York, New York, 10007
Telephone: (212) 220-6556
Price range: Free consultation

Brokers who misrepresent material information, make false statements, or omit critical facts deceive investors. We trace deceptive pitches, whether oral or in writing, and help you bring a FINRA claim to recover losses from investments built on fraudulent misrepresentations and omissions.

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What Is Fraud or Misrepresentation in Securities?

Securities fraud involves intentional or reckless conduct designed to mislead an investor. Misrepresentation occurs when a broker provides false information or misrepresents a material fact, while omission involves failing to disclose a fact that a reasonable investor would want to know before making an investment decision. They are among the most common types of broker fraud.

Under federal securities law, a misrepresentation or omission is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding whether to buy, sell, or hold a security. An omission is material if its disclosure would have significantly altered the total mix of information available.

Fraud is not limited to outright lies. It can also include false representations in writing or orally, omissions of material facts, or even half-truths, which are statements that are technically accurate but misleading because they leave out critical qualifying information.

Key elements of fraud under SEC Rule 10b-5 include:

A material misstatement or omission
Made with intent to deceive or with reckless disregard for the truth (scienter)
In connection with the purchase or sale of a security
That causes the investor’s loss

Common Forms of Fraud or Misrepresentation in Securities

Misrepresentations and omissions can occur in many forms, including:

Exaggerating the safety or returns of an investment
Failing to disclose fees, commissions, or conflicts of interest
Misstating the financial health of an issuer
Concealing liquidity risks or market conditions
Providing incomplete or misleading offering documents

Fraud and misrepresentation frequently appear alongside other claims such as unsuitability, breach of fiduciary duty, or negligence.

Examples of Investment Fraud or Misrepresentation

FINRA Rule 2010 requires brokers and associated persons to observe high standards of commercial honor and just and equitable principles of trade. Making a reckless misrepresentation of material fact in connection with business-related activities violates Rule 2010. The rule is intentionally broad, covering any unethical business-related misconduct, even when it does not involve a specific security.

Arbitration panels and regulators have repeatedly found violations of Rule 2010 and related standards:

Real Example: Private Placements and Undisclosed Compensation

A firm sold private placement interests in pre-IPO funds while misrepresenting its compensation. Investors were told the firm would receive a ten percent commission, when in fact it also had a secret agreement entitling it to additional selling compensation and even a share of carried interest. These conflicts were never disclosed, leaving investors in the dark about the firm’s true financial incentives.

Real Example: Masking Risks in Complex Products

A FINRA member firm was ordered to pay damages after a panel found its representative misrepresented the risks of a private placement, failed to disclose liquidity restrictions, and provided false account statements to mask losses. The misrepresentations induced the investor to hold and even increase the investment, leading to significant losses.

Real Example: Structured Notes Marketed as “Safe”

Brokers marketed structured notes as low-risk income investments when in reality they carried significant downside exposure tied to equity markets. Investors were misled into believing they were buying a safe bond alternative, only to suffer steep principal losses when the market turned.

How Fraud or Misrepresentation Harms Investors

Fraud and misrepresentation damage investors not just financially but also by undermining their ability to make informed choices. Common harms include:

Buying or holding investments based on false or incomplete information
Locking money into products that were misrepresented as safe or liquid
Paying hidden fees and costs disguised through misleading disclosures
Suffering tax consequences from trades triggered under false pretenses
Discovering losses only after misconduct is revealed, when recovery options may be limited

Fraud is uniquely harmful because investors think they are acting on accurate information, when in reality the facts have been distorted or concealed. That deception often magnifies losses.

Legal Standards That Apply

Several rules protect investors from fraud and misrepresentation:

SEC Rule 10b-5 – Prohibits fraudulent statements or omissions in connection with the purchase or sale of securities; requires proof of scienter.
FINRA Rule 2020 – Prohibits manipulative, deceptive, or fraudulent devices or contrivances.
FINRA Rule 2010 – Requires brokers to observe high standards of commercial honor and just and equitable principles of trade.
State Securities Laws – Many states have “blue sky” laws that allow investors to recover losses from fraudulent sales practices without proving scienter.
Common Law Fraud – Provides remedies for intentional misrepresentation or concealment that causes damages.

Our Approach to Fraud or Misrepresentation Cases

At Altamirano PLLC, we investigate fraud and misrepresentation by exposing the gap between what investors were told by brokers and brokerages and what was true. We review account records, correspondence, and supervisory files to show how material facts were distorted, omitted, or falsified, and we use that evidence to build strong cases in the FINRA forum.

We represent investors in cases involving, among others:

False performance claims
Misstated or concealed risks
Hidden fees or commissions
Conflicts of interest not disclosed
Misleading sales materials
Falsified account records

Our work often overlaps with other practice areas, including failure to supervise, when firms fail to prevent fraudulent conduct by their brokers. If you are unsure which “type” of investment fraud applies to you, contact the firm to reserve a consultation time with New York FINRA arbitration attorney Jorge Altamirano.

Investment Fraud or Misrepresentation: FAQs

What is the difference between fraud and misrepresentation?

Fraud generally involves intentional or reckless conduct to deceive, while misrepresentation can include negligent false statements. Both involve providing inaccurate information or omitting material facts, and both can form the basis for recovery in FINRA arbitration.

Can I recover investment losses if the broker didn’t intend to defraud me?

Yes. While fraud requires intent or reckless disregard for the truth, negligent misrepresentation does not. If you relied on inaccurate information and suffered losses, you may have a valid claim to recover your investment losses even without proving intent.

How do I prove fraud or misrepresentation in FINRA arbitration?

To prove fraud, you generally need to show that the broker made a false statement or omitted a material fact, that they knew or should have known it was false, that you relied on it when making an investment decision, and that it caused your loss. Misrepresentation claims may require proving that the information provided was inaccurate or incomplete, even if it wasn’t intentional, and that the misrepresentation caused you financial harm.

What are common red flags of investment fraud?

Red flags include guaranteed or unusually high returns with little or no risk, reluctance to provide written documentation, pressure to act quickly, vague or overly complex explanations, and inconsistencies between verbal representations and written materials. If you encounter any of these, it is important to seek legal advice promptly.

Is there a time limit to bring a fraud or misrepresentation claim?

Yes. Under FINRA Rule 12206, arbitration claims can be filed within six years from the occurrence or event giving rise to the claim. This six-year eligibility rule is separate from state statutes of limitation, which may impose shorter deadlines. Any disputes about whether a claim is timely are decided by the arbitration panel, not by FINRA staff. Because eligibility questions can be complex, it is critical to act quickly to protect your rights.

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Contact a Securities Fraud Attorney in New York

If you believe your broker or brokerage firm committed fraud or misrepresentation, you need legal counsel. A securities fraud lawyer can represent you in FINRA arbitration to recover your investment losses.

At Altamirano PLLC, we help investors recover the money they lost. Call us at (212) 220-6556 or contact us to discuss your options. We handle cases on a contingency fee basis, which means you do not owe us a legal fee unless we recover for you.

Testimonials

Tom Schuler
"Jorge secured a result in our case that felt like a true victory. That, of course, is vitally important. But what is equally noteworthy is how Jorge confidently led us through the process. No questio...

"Jorge secured a result in our case that felt like a true victory. That, of course, is vitally important. But what is equally noteworthy is how Jorge confidently led us through the process. No question to Jorge was too trivial. From the beginning he explained the process, the challenges, and the risks. I was never under-informed."
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Jese Manandhar
"I heard about one of Jorge’s cases on the news and knew that if anyone could help me, it was him. He didn’t disappoint – he and his team went above and beyond to find a resolution to my case th...

"I heard about one of Jorge’s cases on the news and knew that if anyone could help me, it was him. He didn’t disappoint – he and his team went above and beyond to find a resolution to my case that I am very grateful for."
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J.R.
"I contacted Attorney Altamirano to handle a FINRA arbitration. The result was a settlement far beyond my expectations. Without him, I likely would’ve recovered nothing. If you believe in your case,...

"I contacted Attorney Altamirano to handle a FINRA arbitration. The result was a settlement far beyond my expectations. Without him, I likely would’ve recovered nothing. If you believe in your case, it’s worth having a conversation with him. "
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David L., Milwaukee
"I was sold a large number of bonds that turned out to be a deeply flawed investment product. I trusted my former financial advisor because he held himself out as a fiduciary and assured me he would a...

"I was sold a large number of bonds that turned out to be a deeply flawed investment product. I trusted my former financial advisor because he held himself out as a fiduciary and assured me he would act in my best interest. When he recommended the bonds, he claimed they were safe because they were backed by life insurance policies. After the investment failed and proved worthless, I searched online for information and discovered Attorney Jorge Altamirano’s record of success settling FINRA complaints against the brokerage firms whose representatives sold these bonds. I contacted him, and he filed a FINRA arbitration claim against the brokerage firm. He attained a settlement that exceeded my expectations. I am very grateful for the work Attorney Altamirano did on my behalf."
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Lillybeth Feliciano
“Working with attorney Jorge Altamirano made this process smooth, easy and comfortable for me as a client. He was diligent, very professional, respectful and a gentleman. I always felt that I was in...

“Working with attorney Jorge Altamirano made this process smooth, easy and comfortable for me as a client. He was diligent, very professional, respectful and a gentleman. I always felt that I was in very good hands and that Mr. Altamirano spared no effort in defending my interests.”
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T.S.
“I reached out to Jorge Altamirano after reading about his successful case for a client that was affected by trading restrictions on certain stocks. I was impressed that Jorge was able to attain suc...

“I reached out to Jorge Altamirano after reading about his successful case for a client that was affected by trading restrictions on certain stocks. I was impressed that Jorge was able to attain success when every other attorney did not. Jorge explained every step of the way clearly, was extremely thorough, and made decisions with meaningful intent. Not only is he great at what he does but he is also a good person, which I truly appreciated. At the end of the day, he secured a winning outcome for me as well. I couldn’t have asked for more from Jorge and his team. If you are considering Jorge Altamirano to represent you, you are already on the path to victory.”
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