Is a Prospectus Legally Binding?
Video Summary: An investor has the right to rely on the assertions and promises of his or her financial advisor and the brokerage firm. Most of the time the advisor in question has not actually read the Prospectus him/herself. Luckily, the law understands that a seller of securities cannot knowingly or inadvertently misrepresent the important features of an investment and then rely on a legal document to exonerate his/her actions.
Absolutely not. A prospectus is merely and offering document with disclosure to that. If the information in that prospectus is incorrect, then of course it's been a misrepresentation and the offering of the document. Even if that information is correct or will miss representations about the investment are not going to be covered by what may or may not have been disclosed in the perspective, this so-called perspective defense often is not applicable to customers who most arbitrators understand don't read the prospectus, couldn't understand it even if they read it and then are depending upon their financial advisor and their broker to make all the appropriate disclosures to them.