What is Breach of Fiduciary Duty by a Stockbroker?

When Your Financial Advisor Fails To Act In Your Best Interests

Your registered broker-dealer owes you a fiduciary obligation to act in your best interests. Unfortunately, this doesn’t always happen. Instead, your financial advisor might have unsuitably recommended an investment or trading strategy that was too risky for your risk tolerance level or engaged in unauthorized trading in your brokerage account without your permission. You also may have been the victim of outright broker fraud in which misappropriation or theft was involved. This is where our securities attorneys step in and help you.

Bottom line, financial advisors and their brokerage firms who breach their fiduciary duty to customers are placing them at risk of suffering significant investment losses. This is why breach of fiduciary is often what our securities lawyers hear as one of the most common claims made by investors seeking to pursue damages against a broker-dealer.

At Shepherd Smith Edwards and Kantas (investorlawyers.com) our skilled breach of fiduciary securities attorneys represent investors throughout the United States. Over the last 30 years, we have recovered many millions of dollars for our clients.

What Are Other Examples of A Broker Breaching Their Fiduciary Duty To a Client?

  • Neglecting to perform the proper due diligence to ensure a financial product is legitimate and safe before recommending the investment. This due diligence obligation also means that the broker must have done the necessary research to understand the financial instrument and any risks involved so that they can properly convey these to the customer in a way that the latter can understand.
  • Failing to disclose any conflicts of interest that might compel the financial advisor to handle the customer’s account in a way that would benefit the brokerage firm more than the investor.  
  • Neglecting to periodically monitor a client’s accounts to determine if any significant changes need to be made to their portfolio given current market activities.

When Making Unsuitable Investment Recommendations Becomes a Breach of Fiduciary Duty

Until recently, brokers were only required to abide by the suitability standard when selling investments and other financial products to customers. This meant that the order to be executed had to be suitable for the client given their investing profile, risk tolerance level, financial goals, and other criteria.

However, in 2019 the US Securities and Exchange Commission adopted Regulation Best Interest (REG BI). This rule states that any recommendation a broker makes to a customer also must satisfy this best interest requirement. It is now literally a brokerage firm’s fiduciary duty to never place their own best interests before a client, whether making a recommendation or executing an order.

Using a Securities Lawyer to  Find Out Whether Your Investment Losses Are Due To A Broker’s Breach of Fiduciary Duty

Proving that your financial losses occurred because your brokerage firm was in breach of its fiduciary duty to you can be challenging, which is why you want to work with expert securities lawyers. Shepherd Smith Edwards and Kantas has the knowledge, experience, and resources to determine whether you may have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration claim against your broker-dealer.

Over the years, our savvy securities attorneys and investment fraud law firm has helped thousands of investors to:

  • Determine whether their broker breached their fiduciary obligation to them. 
  • Find evidence showing exactly how this duty was violated.
  • Prove that this breach of fiduciary duty resulted in the claimants’ investment losses.

How You Can Work With Shepherd Smith Edwards and Kantas

Call our seasoned securities lawyers at (800) 259-9010 today and ask for your free, no obligation case consultation.

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