1. Common Law Fraud & Intentional Misrepresentation Investment Professionals and their firms may also be liable under common law fraud and intentional misrepresentation theories. Arizona courts have established that for a claimant to establish actionable fraud, that claimant must show a concurrence of the following elements: (1) A representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity;or reckless securities fraud, intentional or reckless sale of unregistered securities, or a scheme or artifice to defraud involving the purchase or sale of securities. 98 10
2. Such misrepresentations and omissions would likely be material to the clients' willingness to conduct business with the Investment Professional and reliance upon the Investment Professional's statements in investing in the advocated-for vehicles. It is likely that if a client had known of the misrepresented and/or omitted material facts, he or she might not have agreed to invest with the Investment Professional, not invest in the Non-Traded REITs, or at least not have Non-Traded REITs comprise such a high percentage of the individual's portfolio. Given the fact Investment Professionals will have suggested investment in Non-Traded REITs to induce action, should the client suffer harm as the result of the Investment Professional's misrepresentations and/or omissions, the client will likely be able to prove actual and proximate cause. 11. Aiding and Abetting Fraud & Breach of Fiduciary Duty Investment Professionals and firms may also be liable for aiding and abetting any fraud 100 and aiding and abetting breach of fiduciary duty. 101 However, there are several states, such as Arizona, that have statutorily abrogated causes of action for aiding and abetting securities fraud;Investment Professionals advocating for their clients to invest in Non-Traded REITs may make misrepresentations or omissions of material fact to clients relating to the investments' risks, the Investment Professional's conflict(s) of interest, and the fees the Investment Professional will charge-both up front and as time goes on
3. )) (quotation marks omitted); see also Nielson v. Flashberg, 101 Ariz;Lux;420 P.2d,1966