When you entrust someone to legally act on your behalf, such as your stockbroker, that person is called a fiduciary. When a person is in this position of trust, they have a responsibility to act in the best interest of their client, while putting their own interests aside. By accepting the role of a fiduciary, they have subsequently agreed to put their own interests aside and consider only the needs and interests of the client.
The fiduciary is required to protect the client’s interests and property with the same level of care and foresight they would use to protect their own assets. The fiduciary cannot allow his or her own personal motives to affect the management of the client’s account.
Unfortunately there are times when this does happen, and the Fiduciary Duty has been breached. This can happen when the broker sells an unsuitable investment, or recommends a strategy without a reasonable basis. Often times this happens for the benefit of the broker.
Additionally, the fiduciary duty requires not only the broker, but also the brokerage firm to adhere to industry standards, rules and regulations. Brokerage firms are required to monitor employee activity, perform due diligence before a sale, and follow up after the sale to monitor the investments. The firm’s failure to fulfill these obligations could also be cause for a claim of Breach of Fiduciary Duty.
Blum Law Group represents clients who have been victimized by brokers. If you have suffered losses caused by a Breach of Fiduciary Duty please call 1-877-STOCK-LAW for your free consultation with the Blum Law Group.