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, excessive activity, unauthorized trading, and the sale of unsuitable or defective investments.
Guiliano Law Firm
Our practice is limited to the representation of injured investors against stockbrokers and brokerage firms for misconduct. We represent clients on a contingent fee basis, and there is never any cost or obligation for us to review your claim.