To state a claim for securities fraud under § 10 (b), and Rule 10b-5, as promulgated thereunder by the SEC, 17 C.F.R. §240.10b-5, a private plaintiff must only show that defendants, knowingly or recklessly, made a false representation or omission of a material fact, and was relied upon, and was the proximate cause of damages. Kline v. First Western Gov't. Securities, Inc., 24 F.3d 480, 487 (3rd Cir.), cert. denied, 506 U.S. 934 (1994); Shapiro v. UJB Financial Corp., 964 F.2d 272, 280 (3rd Cir.), cert. denied, 506 U.S.934 (1992); Peil v. Speiser, 806 F.2d 1154, 1160 (3rd Cir. 1986).
("Omitted information is material if there is a substantial likelihood that a reasonable shareholder would consider it important") (quoting, TSC Industries, Inc. v. Northway Computers, Inc. , 426 U.S. 447, 458 (1975) Or the "omitted information "might give a reasonable investor pause." Kaplan v. Rose, 49 F.3d 1362, 1374 (9th Cir. 1994).
State and federal securities laws prohibit brokers from making false statements or omissions of material fact in connection with the sale of securities. False statements often include guaranties, price predictions, or purported special information regarding an important contract, approval, earnings announcement or other newsworthy event. This is a form of stockbroker fraud or misconduct.
Fraud may also take the form of omission by failing to disclose, among other things, the broker's relationship with the issuer, the domination and control of the market for the security by the brokerage firm, the limited market for the company's stock, or the lack of any appreciable assets or operating history of the company. However, information is only material if a reasonable investor would rely upon it. Remember, if something is too good to be true, it definitely is.
Guiliano Law Firm, P.C. Practice limited to the representation of investors in arbitration claims against stockbrokers for fraud, the sale of unsuitable investments, breach of fiduciary duty, failure to supervise. National Practice. Contingent Fee. Free Consultation. (877) SEC-ATTY.