Breach of Fiduciary Duty

Securities brokers and investment advisors are fiduciaries that owe their customers a duty of loyalty and care. A broker or investment advisor, as an agent of the customer, stands in a special relationship of trust, confidence and responsibility, with certain obligations to his customer. Because of his position as a licensed professional, investment advisors and securities brokers hold themselves out as being trained, experienced, and able to render specialized service. The level of loyalty and care owed depends on the type of accounts held by the investors or the relationship between the parties. In a discretionary account the broker can manage the customer's portfolio without obtaining explicit customer approval for each individual transaction. On the other hand, for a non-discretionary account the broker is required to get customer approval before making trades, to research every recommendation, to make full and complete disclosures, and to place an order in a timely manner.

Brokers and investment advisors have several obligations. First, a broker or investment advisor must manage accounts in a manner directly in line with the needs and objectives of the customer. Investment advisors must keep abreast of changes in the market, which could affect his customer's interest, and they must act responsively and sensibly to protect those interests. Investment advisors have an obligation to keep his client up to date on each completed transaction. Finally, brokers and investment advisors must explain the impact and potential risks of the recommended trading strategy.

Since investors are expected to place their trust in their stockbroker or investment advisor whom they rely upon for expertise in making the investment decisions, they are held to an extremely high standard regarding their duties of loyalty and care and must conduct themselves with the utmost good faith and integrity.

If you believe your financial advisor breached his or her fiduciary duty to you, and this breach resulted in losses in your account, contact us for a comprehensive and confidential investment advisor fraud evaluation with no obligation.