Understanding investment broker negligence

On Behalf of | Apr 27, 2020 | Firm News

Putting your financial investments in the hands of a professional can be a great way to make the most of your money. But what if things aren’t going so well? How do you know if your broker is doing their job correctly?

Negligence is one way that your broker could be mishandling your money. If a broker is not meeting the proper codes of conduct, they may be negligent in their job. Though there are specific guidelines they must follow, here are some things your broker should be providing while handling your funds:

  • Confidentiality – Brokers often have access to passwords, accounts and social security numbers. Your broker needs to keep private details about clients confidential, including their names.
  • Open communication – Brokers should always show investment risks, consequences and compensation before decisions are made.
  • Compliance – A broker must also keep their license up to date the whole time they are working. They must follow the regulations set out by the Securities and Exchange Commission.
  • Honesty – Brokers need to be honest with their clients, never misrepresenting any information about the investments or their knowledge of the market.
  • Reasonable recommendations – Clients trust that brokers will keep up with the market and news to properly apply that knowledge to their investments. They also should be making recommendations that are in line with what the client wants. For example, not making high risk investments when the client wants something low risk.

Negligence is not always intentional harm. However, if they are not fulfilling the expectations of their job and lose your money, they may be guilty of negligence. If you have been losing investments and believe your broker is not doing their job correctly, talk to a legal professional. They will help you understand if there really is negligence at play and how to proceed.

A financial broker is seen as an expert in their field, so it makes sense to bring your investment to them. Still, they sometimes make mistakes and don’t do their due diligence, resulting in your loss. In order to get a clear picture of your rights and the obligations your broker owes/owed to you, contact us and speak with attorneys with over 30 years of experience representing clients in securities matters.