Brokerage firms have a legal duty to supervise their brokers and their brokers’ interactions with clients to ensure compliance with and prevent violations of the rules of the security industry.
When an individual broker acts in an unlawful manner against the interests of the client and that client suffers damages as a result of such wrongdoing, the firm may be held liable for the investor’s losses if the firm failed to reasonably supervise that broker.
If you have suffered financial loss as a result of a brokerage firm’s failure to supervise a broker, contact Meyer Wilson today. We can discuss your legal options in a consultation.
Failure to Supervise Claims
There are many scenarios in which you could have a failure to supervise claim against the brokerage firm. In many cases, the brokerage firm is responsible for financial losses.
Examples of failure to supervise claims include the following:
- The firm failed to properly train the broker.
- The firm did not implement a supervisory system to oversee the broker’s dealings with you.
- The firm did not follow their own supervisory policies and procedures with respect to your broker or your account.
- The firm did not inspect or approve trades made in your account with the eye to detect violations of industry rules.
- The firm did not supervise transactions in and out of your investment portfolio to detect theft or unauthorized withdrawals.
A lot of investigation is needed in this type of claim, which is why you need to ensure that the attorney you choose has the necessary experience and background to build your case.
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What Are FINRA’s Compliance Rules?
FINRA rules state that a brokerage firm must have reasonable systems and procedures in place to monitor employees and protect against investment fraud. Each firm must keep a written copy of its policies at each office that is designated an office of supervisory jurisdiction, and also must designate a supervisor that is responsible for the oversight.
These FINRA rules require compliance with the following (as examples):
- Pre-Hire Screening. This is essentially to check the agent’s background. Has the agent changed firms often? Does he or she have a disciplinary history?
- Yearly Review and Inspection. Each year, the individual brokers with a firm should participate in a meeting to discuss their compliance with FINRA rules. In addition, each individual office should be inspected to detect and prevent violations.
- Monitoring Communications of Individual Brokers. This covers both communications with existing customers, and communications with potential customers, such as advertising.
- Monitoring Customer Information and Transactions. This is often monitored by a computer system that will alert a supervisor to suspicious activity.
- Training and Licensing. A firm should monitor that its individual brokers are licensed to sell securities, and are current on required training.
Contact a Securities Fraud Attorney
Proving a failure to supervise claim requires a thorough investigation of the facts surrounding your claim and a diligent attention to detail. Fortunately, Meyer Wilson has spent decades of collective experience in this area. Because our practice is devoted entirely to serving the victims of investment misconduct, our skills are well-honed and perfectly suited to your case.
We have the necessary resources and insight to investigate and aggressively pursue your case until it reaches a just conclusion. Our securities fraud attorneys won over $350 million for our clients because Meyer Wilson has the experience and skill to represent your interests effectively.
Contact us online today or give us a call at (614) 532-4576 for a consultation.
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