Representing Texas Investors Whose Brokers Disregarded Their Best Interests And Caused Them Unnecessary Portfolio Losses
From our Dallas, TX securities law office, Shepherd Smith Edwards and Kantas (investorlawyers.com) represents Lone Star State investors against broker-dealers and investment advisers who sustained serious losses because their financial advisor violated Regulation Best Interest (REG BI) when working with them. This is not the kind of legal claim you want to pursue without seasoned Texas REG BI interest attorneys fighting for you.
What Is Regulation Best Interest And How Is It Supposed To Protect Retail Investors in Texas?
Since June 30, 2020, Regulation Best Interest has set up a higher standard of conduct for brokerage firms. It requires that they act in the best interest of any retail client that they work with instead of just meeting the suitability standard established under the Financial Industry Regulatory Authority (FINRA). Reg BI was established under the US Securities Exchange Act of 1934 by the Securities and Exchange Commission (SEC).
Retail investors are individual and non-professional investors who often rely on brokerage firms and investment advisors to manage their money.
FINRA’s suitability requirement holds brokerage firms to account for making sure all recommendations are appropriate for a retail customer, given the investor’s profile. However, there is no fiduciary obligation involved. This has allowed financial advisors to recommend products or strategies that cost customers more, as long as they meet the criteria of this rule.
The SEC’s Reg BI includes additional obligations requiring that retail clients’ best interests are always prioritized over those of a brokerage firm:
1) Care Obligation: The broker-dealer must ensure reasonable “diligence, care, and skill” when recommending a transaction or a series of them to retail investors. Suitability, understanding the possible “risk, reward, and costs,” as well as having reasonable grounds for thinking any series of transactions recommended is not excessive for this particular customer, is required.
2) Disclosure: All material facts involving the broker-dealer’s relationship to the customer, as wellas information about material fees and costs involving transactions, holdings, and accounts, must be disclosed.
3) Conflict of Interest: Any conflicts the brokerage firm might have in making any recommendation have to be disclosed, monitored, or if, if possible, eliminated.
4) Compliance: Brokerage firms must set up, maintain, and enforce policies and procedures to ensure compliance with Regulation Best Interest.
What Are Some Examples of Brokerage Firms Violating Reg BI and Causing Texas Investors Harm?
- Excessive mutual fund switching. Not only does this cost the customer fees, but also, brokers usually end up making money for every transaction.
- Failure to disclose conflicts of interest, such as when the financial advisor has a stake in the alternative investment they are recommending.
- Hard selling a particular investment because to do so is in the best interests of the broker-dealer.
- Churning for purposes of earning commissions and not because excessive trading is an appropriate trading strategy for the client.
- Encouraging a customer to buy Class A shares when lower-cost, comparable alternatives that are just as suitable for the investor are available.
How Can Our Dallas Regulation Best Interest Attorneys Help?
Shepherd Smith Edwards and Kantas represents Texas investors in recouping their losses caused by broker misconduct or negligence. This includes investment losses to retail investors that are caused by violations of Regulation Best Interest (Reg BI).
Many of us are former financial advisors who quit the brokerage industry because we didn’t like the many unsavory practices we witnessed that were hurting rather than helping investors. It is why we chose to become securities attorneys and fight for clients like you. Our Dallas, Texas Reg BI law firm has been in business for more than 35 years. Bringing over 100 years’ worth of combined experience in securities law and the securities industry to over case, this is the only kind of law that we practice.
We know how to identify when Reg BI violations have been made and whether you have legal grounds for suing a brokerage firm for damages. If we decide to work together, we will provide you with quality securities representation and personalized attention. More than 90% of our clients have secured full or partial financial recovery through our skilled and dedicated efforts.
Our Dallas Regulation Best Interest Law Firm
Founders Square
900 Jackson St #440-A
Dallas, TX 75202
Call (214) 613-5306 or (800) 259-9010 to schedule your free, no obligation case consultation.