Breach of Fiduciary Duty

Investors place not only money in the hands of investment professionals, such as brokers and financial advisers; they also give their trust. For this reason, most states impose a fiduciary duty on investment professionals to act in the best interests of their client. This means that an investment professional has an obligation to serve his/her client’s interests with loyalty, integrity and good faith.

The scope or extent of an investment professional’s fiduciary duties will usually depend upon the facts and circumstances of each individual case. Although the facts vary from case to case, there are some duties that apply to all financial advisers, including the following:

  • The duty to recommend securities that the adviser has reasonable grounds to believe are suitable for the customer.
  • The duty to adequately inform the customer about the risks involved in buying or selling a particular security. The duty to avoid self-dealing and to disclose any personal interest the broker may have in any recommended investment.
  • The duty not to misrepresent or omit any material facts.
  • The duty to purchase or sell securities only after receiving prior authorization from the customer.
  • The duty to disclose any conflicts of interest that might have an effect on his or her recommendations.

An investment professional’s fiduciary duties are even greater in the case of trusts, charitable foundations or discretionary accounts. Investment professionals who have discretionary authority over a customer’s account and can make trading decisions independently without getting the customer’s prior approval have an even more stringent fiduciary duty.

If you feel you have suffered financially due to the breach of fiduciary duty owed by your investment professional to you, contact Stephanie M. Beige.