An investor can suffer significant financial losses when a broker or investment adviser commits fraud. If you suspect misconduct by your broker or investment adviser, you may be able to recover your losses under federal or state law. Securities fraud lawyer Steve A. Buchwalter is committed to helping clients throughout Los Angeles County and beyond assert claims against unscrupulous financial professionals. With over 20 years of experience, Mr. Buchwalter is a seasoned litigator and negotiator who can help you pursue compensation for your losses.Securities Fraud
Securities fraud occurs when an investor is induced to purchase or sell a security based on false information. Investors rely on financial professionals, such as brokers and investment advisers, to help them facilitate and manage their investments. Given the nature of their relationship, brokers and investment advisers are expected to act with the utmost good faith, loyalty, and reasonable care when dealing with their customers. This fiduciary duty is breached when a broker or investment adviser commits fraud, which can take the form of a misrepresentation or omission of fact, or recklessness.
For example, a person can commit fraud by withholding key information, providing false or misleading information, or offering advice without regard to a customer’s best interests. If you suspect that your broker or investment adviser engaged in unlawful conduct, you may bring a claim to recover damages under federal law, California law, or both.Claims for Fraud under Federal Law
Two main federal statutes govern securities fraud: the Securities Act of 1933 and the Securities Exchange Act of 1934. The 1933 Act deals primarily with fraud in the registration of securities and disclosure requirements. The 1934 Act deals with fraud in the offer and sale of securities. Specifically, Rule 10b-5 of the 1934 Act makes it unlawful for anyone to make an untrue statement of a material fact (or omission), or to engage in any practice that would constitute fraud or deceit, in the sale or purchase of a security.
To prove a federal securities fraud claim, a plaintiff would have to show:
- A material misrepresentation or omission of fact;
- Scienter, which means that the defendant acted intentionally or with deliberate recklessness;
- A connection with the purchase or sale of a security;
- Reliance on the misrepresentation or omission;
- Economic loss or damages; and
- Loss causation, which is a causal connection between the misrepresentation or omission and the loss.
If the security was sold or purchased in California, you may have a claim under the state law, which does not require you to prove scienter, reliance or loss causation.California and Fraud
You can bring a state securities fraud claim if there was an offer or acceptance to purchase a security in California, even if the offer did not originate in the state. Similar to Rule 10b-5, Section 25401 of the California Corporations Code makes it unlawful for anyone to defraud, or make an untrue statement of fact or omission, in connection with the sale, offer, or purchase of a security. Section 25501 of the Code creates civil liability for violations of Section 25401. A person who violates Section 25401 is liable for damages unless he or she can demonstrate that either the plaintiff knew the facts were untrue, or that he or she exercised reasonable care and did not know of the untruth or omission.
Unlike the federal rule, a person alleging securities fraud in California only has to show that the defendant engaged in a material misrepresentation or omission of fact, in connection with the purchase or sale of a security. It is not necessary to show scienter, reliance or loss causation. This makes proving a securities law claim under state law comparatively easier than under federal law.Contact a Ventura County Lawyer to Discuss Your Investment Fraud Claim
Steve A. Buchwalter is an investment fraud attorney who represents many clients in Ventura County and elsewhere in Southern California in securities law and business matters. Over the span of his career, Mr. Buchwalter has helped hundreds of clients recover losses due to broker misconduct, including fraud. He offers effective representation in alternative forms of dispute resolution, including mediation, arbitration, and litigation. Mr. Buchwalter serves clients in Irvine, Santa Barbara, and many of the surrounding communities. Call us at 818-501-8987 or complete our online form to arrange a consultation.