On June 2, 2017, Nevada Governor Brian Sandoval signed Senate Bill 383, which amends the Nevada Securities Act to include broker-dealers, investment advisors and their individual representatives as fiduciaries. The bill went into effect on July 2, 2017.
Under Nevada securities law, “financial planners” are defined and considered to be fiduciaries in relation to their clients. The law previously specifically excluded brokers, investment advisers and their representatives from the definition of a financial planner; under Senate Bill 383 now they are specifically included. Attorneys, CPAs and insurance brokers continue to be excluded from the definition.
What is a fiduciary? A fiduciary owes his client a greater or higher duty of care than an ordinary salesperson. A fiduciary breaches his duty of care if he does not act in his customer’s best interest, is conflicted, engages in self dealing, lacks candor or honesty or otherwise does not exercise due care in his dealings with his client.
With the passing of Senate Bill 383, that greater duty of care to their clients is now required of Nevada stockbrokers. This statutory requirement of the exercise of fiduciary duty extends to all customer accounts, not just retirement accounts.
Brokers will now be required to disclose their personal financial gain (meaning commissions or fees) relating to a recommendation or solicitation to the client at the time the recommendation or solicitation is made. Brokers must make a diligent inquiry of their clients’ financial condition and investment objectives at the beginning of their business relationship and also periodically thereafter so long as the relationship continues. Brokers must also disclose any conflicts of interest that may exist because of the broker’s recommendation to the client.
Under Senate Bill 383, should a breach of the fiduciary duty occur, and an investor is harmed, that investor may seek to recover not only the economic loss sustained by the investor, but also the litigation costs and attorneys fees.
Senate Bill 383 further provides that the Nevada state regulator may issue additional regulations to implement the Senate bill.
What the passage of Senate Bill 383 means to investors is that they have an additional tool to fight abusive, unethical or grossly negligent stockbrokers and brokerage firms who act in their best interests to the detriment of their clients.
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
Nicholas J. Guiliano has over twenty years experience representing investors before the Financial Industry Regulatory Authority, the New York Stock Exchange and before the National Association of Securities Dealers, Office of Dispute Resolution. Over the last twenty years, he has represented more than a thousand investors from all across the United States and from several foreign countries, in claims against stockbroker and broker-dealers for fraud, breach of fiduciary duty, churning or excessive trading, the sale of unsuitable investments, the sale of defective investments, the sale of unregistered securities, and the failure to supervise. He is frequently quoted in the national media on securities and investment related issues, most recently on National Public Radio. He offers his services on purely a contingent fee basis, and is also a member of Public Investors Arbitration Bar Association.