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.