What is Broker Negligence?

Brokerage firms and the stockbrokers associated with brokerage firms are subject to the standards of care established by the U.S. Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA). Broker negligence occurs when a broker fails to provide an investor the standard of care they should as investment professionals. Negligence can be grounds for a securities arbitration claim when the investor sustains investment losses as a result of the stockbroker’s negligent act or omission.

Negligent Misrepresentations by Brokers

Negligent misrepresentations about particular investments and investment strategies by a stockbroker or financial advisor are a breach of their duties set forth in FINRA Rule 2010. Broker negligence is also a breach of fiduciary duty and typically results in investor harm. Below are more examples of negligent actions by stockbrokers or financial advisors.

• Stockbroker or financial advisor failed to analyze and investigate an investment sufficiently to provide a reasonable basis for a belief that the key representations they made to the investor were truthful.
  
  
• Stockbroker or financial advisor should have known about the conflict of interest between the issuer and the brokerage firm promoting the investment.
  
  
• Stockbroker or financial advisor did not understand the potential risks and rewards of the investment to ensure that their recommendations and met suitability standards, including avoiding overconcentration in any particular asset or asset class.

Contact Riera Law if You Are a Victim of Broker Negligence

If you believe that you have suffered investment losses due to broker negligence, please contact the experts at Riera Law. Our team can help determine whether your investment losses were the result of a broker or financial advisor’s negligence. If your investment losses were the result of negligence we may be able to recover the losses through a claim in FINRA arbitration. Click here or call us today 305-204-9779 for a free case evaluation.