Stockbrokers have many obligations to their clients. Both federal and state laws require brokers to ensure they are acting in a manner that benefits their clients. The extent of the obligations a stockbroker owes to their clients varies depending on various factors, including the state in which they operate.
Unfortunately, many stockbrokers fail to uphold the standards that apply under the law. At Meyer Wilson, our Columbus investment fraud lawyers have a long history of helping our clients recover money from stockbrokers who engaged in misconduct, leading to losses for the investor. Learn about your legal options during a free case review.
The Difference in Obligations Between a Stockbroker and a Financial Advisor
When considering entrusting your money to a financial advisor, it is important to understand the obligations that are owed to clients. The term “financial advisor” is a generic term used to describe the two types of advisors: investment adviser representatives, who always owe their clients a fiduciary duty; or stockbrokers/ registered representatives who work at a brokerage firm and owe a lesser duty.
Every move a registered representative makes with a client’s money must be done in the best interest of the investor. Investment adviser representatives owe their clients the higher duty of fiduciary and they must continually review the manner in which their client’s money is being invested to determine if changes need to be made and work to get their client the largest return on their investment while staying within their risk tolerance level.
Depending on the circumstances, the duties of a registered representative may extend to other duties as well. An experienced investment fraud lawyer can help you determine the specific obligations of your broker.
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Increased Obligations Under Regulation BI
In 2019, the SEC enacted Regulation BI, which significantly increased the obligations stockbrokers/registered representatives have to their clients.
The new standards require brokers to put the needs of their clients ahead of their own, as well as divulge any conflicts of interest they may have in making a specific investment recommendation.
The Obligations of Brokerage Firms
In addition to the obligations a stockbroker has to their clients, brokerage firms also owe investors a duty to protect them from investment fraud and other forms of misconduct. These firms have a duty to supervise the actions of their registered representatives and ensure they are complying with all state and federal laws.
If you suffer financial losses due to misconduct, both the stockbroker and the broker firm that employs them can potentially be held liable. When able to pursue compensation from the brokerage firm in addition to the individual broker, the amount of money available will likely increase significantly.
An experienced investment fraud lawyer can conduct a thorough investigation into the losses you suffered and determine whether the brokerage firm is liable. They can then help you file a lawsuit and build your case to give you the best chance of a favorable case result.
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Your Options When a Stockbroker Fails to Meet Their Obligations
Unfortunately, many stockbrokers fail to properly and legally handle their clients’ money. If you suffered financial losses due to investment fraud or another form of misconduct committed by a registered representative, you should reach out to an experienced investment fraud lawyer as soon as possible.
When pursuing compensation in an investment misconduct case, you will likely need to go through Financial Industry Regulatory Authority (FINRA) arbitration to recover damages. When you sign an investment contract with a brokerage firm, there will likely be language stating that any disputes that may arise will need to be resolved through arbitration.
An experienced attorney from Meyer Wilson can help you through the arbitration process and give you the best chance of securing a favorable outcome. When going through FINRA arbitration, it is important to keep in mind that FINRA arbitration rulings are legally binding, and your options for appeal are typically limited.
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Get Help From an Experienced Investment Fraud Lawyer Today
After suffering financial losses due to a stockbroker failing to meet their obligation to you, the best way to improve your chances of recovering the money you need and deserve is by securing the services of an experienced investment fraud attorney.
At Meyer Wilson, we are aware of all the laws and regulations stockbrokers are required to follow and can help identify if a violation has occurred. If we uncover misconduct, we will build your case and present it to the arbitration panel to improve your odds of securing the compensation you deserve.
In the 25 years since we opened our doors, we have represented thousands of investment fraud clients and helped them secure over $350 million in compensation. Contact us today by phone or through our website to schedule a free consultation with a member of our legal team.
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