One way that brokerage firm fraud may occur is when a brokerage firm engages in intentional misrepresentation of a company in order to influence its stock values, or the investor's desire to purchase the company's securities. For instance, if a brokerage firm publicly supports or promotes a certain company and its stock, but privately admits or knows that investing in that company would be risky or result in losses, then the brokerage firm has committed securities fraud. A similar type of fraud may occur if the brokerage firm intentionally omits material facts about a company or a security in an attempt to persuade the investor of the security's merit. By failing to essential information about the security, the brokerage firm commits securities fraud, and thus may be liable under federal or state securities laws for any resulting losses to investors who relied on the brokerage firm's representations, or omissions of fact.