A few years ago I caught a radio interview of a Canadian hockey coach who had been fired, but not told so by his team before it was reported in the press. When questioned about his situation the coach (in his best Canadian accent) reflected, "I’d like to have ‘beeen’ notified!"

This phrase has become a family expression in our home. Whenever someone fails to include some detail likely to impact on an action or decision, we are almost certain to mock that accent and respond accordingly.

It’s the same way with investment fraud cases. Sometimes the fraud is in the execution of the scheme, as in the case of investor money that goes to fund the advisor’s daughter’s wedding, or his new BMW. Sometimes the fraud is in the inducement – the failure to notify the investor of the whole truth behind the planned use of their money. Even silence can constitute fraud if the person receiving your investment money has a duty to disclose facts he or she knows will impact on your decision. Usually that duty to disclose comes as a result of your relationship to the advisor or as the result of a law, like Idaho’s state security fraud laws.

So when is an omission of fact material? If it is material, it may be that you have a way to get that investment back. 

"An omission or misstatement is material if a substantial likelihood exists that a reasonable investor would find the omitted or misstated fact significant in deciding whether to buy or sell a security, and on what terms to buy or sell."

That is the basic premise behind the notion of fraud by omission. It’s that fact that causes you to respond like a hockey coach – "I’d like to have beeen notified" – before I gave you that hundred thousand dollars!

Sorting out whether there is fraud in the omission of some fact is not as easy as it sounds. A person may have civil or criminal liability for the failure to disclose, or there may be no liability at all. If you are in this situation and need to sort out whether you have liability, get with an experienced lawyer before you get notified – of impending criminal or civil case.