In the securities industry, a fiduciary relationship exists between the client investor and the brokerage firm, financial advisor, or investment advisor. A fiduciary duty can arise through written agreement, statute, or a verbal agreement in which the investor places trust and confidence in another person. Over the years, the legislature and courts have defined the fiduciary responsibility of brokerage firms, financial advisors, and investment advisors to include the following:
- Understand the nature of the investment’s risks, rewards, and strategy before recommending the investment;
- Make only suitable recommendations to the investor based upon the investor’s objectives, needs, and circumstances;
- Furnish information to the investor that would be material to the investor’s decision about the investment recommendation;
- Not misrepresent or omit material information; and
- Refrain from self-dealing.
To the extent a financial advisor or investment advisor directs the trading activity in an account through discretionary trading, enhanced fiduciary duties are owed to the client. These duties include, but are not limited to, warning investors regarding a change in market conditions that may impact the value of their investments.
How Can I Tell if My Broker Breached A Fiduciary Duty Owed To Me?
While nobody can predict the day to day movements of the financial markets and predict precisely how your investment portfolio will perform, financial advisors are obligated to act in accordance with applicable laws and regulations, which require them to conduct themselves in the manner outlined above in order to minimize the likelihood that clients will experience substantial losses.
If your portfolio has seen sudden or significant losses, or if you suspect your broker has acted in any way that is careless or improper, we encourage you to contact our office. Every situation is different, but by talking with an attorney who is experienced in handling claims involving breaches of fiduciary duty, you can get a strong sense of whether you might have a case and how much it might be worth.
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In the event a fiduciary duty is breached, the fiduciary may be held responsible for the financial harm caused. The Wolper Law Firm has extensive experience handling claims involving breaches of fiduciary duty both in court and arbitration. If you have any questions about whether your investment professional has breached his/her fiduciary duties, please contact the Wolper Law Firm for a free consultation and case evaluation.
Call us at 954.406.1231.