Although most brokerage firms deny that they owe their customers any fiduciary duties, stockbrokers and investment professionals in most jurisdictions owe their clients the highest fiduciary duties, including the duty to act in the customer’s best interest and not to engage in self-dealing or conduct that is designed to benefit the stockbroker at the expense of the client. The stockbroker has a duty to place the client’s interests above the interests of the stockbroker or the stockbroker’s employer.
The federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects or special information in possession of a broker or the securities brokerage firm.
Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. A statement is material if it assumes actual significance in the deliberations of a reasonable investor. If a securities broker touts a particular security and makes a misstatement concerning an important contact with a company and a potential business prospect, or an upcoming earnings, or other announcement, which the broker either knows to be false or makes with a reckless disregard for the truth, these are misstatements.
Omissions, include, most often the failure to disclose compensation for the broker and his or her brokerage firm based the sale of a particular, often proprietary product, firm underwriting, or mark-ups or trading profits resulting from the recommendation and sale of securities held in inventory or in which the firm makes a market.
There are other forms of stockbroker misconduct, which are actionable under the law. These include claims against stockbrokers for failure to conduct due diligence, lack of product knowledge or reasonable basis suitability, negligence, self-dealing, fraud, excessive activity, unauthorized trading, and the sale of unsuitable or defective investments.
Stockbrokers and investment professionals owe their clients certain fiduciary duties, most of which are apparent and obvious, including the duty not to lie, steal or cheat, or to place their interests or those of their employers ahead of the your financial interests.
Specifically, the federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects, or to guaranty against losses.
Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. Omissions include such things as the broker’s failure to disclose that they are receiving more compensation from the sale of a particular security than another security, or the failure to disclose that the broker or brokerage firm failed to conduct any meaningful due diligence with respect to the recommendation to purchase a particular security.
A statement is material if it assumes actual significance in the deliberations of a reasonable investor.
There are other forms of stockbroker misconduct, which are actionable under the law including the federal securities laws, including claims for the sale of overly risky or otherwise unsuitable securities, breach of fiduciary duty, fraud in connection with the sale of mutual funds or structured products, the sale of unregistered securities, and variable annuity fraud.
Brokerage firms are also responsible for the misconduct of their agents under the common law, as control persons under the federal securities laws and based upon the failure to supervise the conduct and activities of the stockbroker, which for a variety of reasons, may have been intentionally ignored.
Guiliano Law Group
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.
OUR PRACTICE AREAS
FINRA Arbitration
The litigation of individual and group investor claims against securities broker-dealers and investment professionals adjuducated in arbitration before the Financial Industry Regulatory Authority.
Defective Financial Products
Alternative Investments, Promissory Notes, Structured Products, High Yield Bond Funds, Non-Marketable Real Estate Investment Trusts, Inverse and Leveraged ETFs, the Failure to Conduct Due Diligence.
Unsuitable Investments
Speculative or High Risk Investment Recommendations, Unsuitable Investment Strategies, Low Priced Securities, Customer Specific Unsuitability, Inappropriate Investment Recommendations.
Stockbroker Misconduct
Breach of Fiduciary Duty, Churing, Unauthorized Trading, Fraud, Stockbroker Theft, Ponzi Schemes, the Sale of Unapprovied investments.
