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Securities Fraud (Part IV of VI)

| Jul 4, 2023 | Securities Fraud / Investment Scams

If you have been a victim of investment fraud, contact an investment fraud attorney today.

In a civil lawsuit based on violation of the anti-fraud provisions of the Securities Exchange Act of 1934, a/k/a Rule 10b-5 violation, the following must be found by a preponderance of the evidence:

1. That defendant used an “instrumentality of interstate commerce” in connection with the securities transaction involved in the case

2. That defendant made a false representation of a material fact (or omitted a material fact) in connection with the purchase or sale of a security

3. That defendant acted “knowingly” or with “severe recklessness”

4. That plaintiff “justifiably relied” on defendant’s conduct

5. That plaintiff suffered damages as a proximate result of defendant’s wrongful conduct

6. That plaintiff suffered damages.

4. That plaintiff “justifiably relied” on defendant’s conduct

To decide if plaintiff justifiably relied on defendant’s alleged misrepresentations, you should consider:

• plaintiff’s sophistication and expertise in matters involving finance and securities;

• the existence of a long-standing business or personal relationship between plaintiff and defendant;

• plaintiff’s access to relevant information;

• whether defendant owed a fiduciary duty to plaintiff;

• whether defendant concealed fraud;

• whether plaintiff initiated the stock transaction or sought to expedite it; and

• whether defendant’s misrepresentations were general or specific.

The term “fiduciary duty” means the duty one person owes to another in special relationships of trust and confidence, in which one person justifiably expects the person who owes the duty (the fiduciary) to act in the best interests of the person to whom the duty is owed. The duties a financial advisor, an accountant, and an attorney owe to their clients are types of fiduciary duties.

Consider all these factors to decide whether plaintiff’s reliance was justified. No single factor is enough. If you find that defendant omitted or failed to disclose material facts, then you may presume that plaintiff relied on defendant.

The law assumes that plaintiff would have relied on material facts that were intentionally withheld. But defendant may overcome this presumption if she can prove, by a preponderance of the evidence, that even if she had disclosed the material facts, plaintiff would have made the same decision regarding the purchase or sale of a security.]