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At the law firm of Colling Gilbert Wright & Carter in Orlando, Florida, our securities fraud lawyers have helped many people who have been financially hurt by a breach of fiduciary duty on the part of their broker.
What Is Fiduciary Duty?
Fiduciary duty exists where there’s a trust relationship between a customer and a professional. You the customer hire a doctor or stockbroker because of their professional knowledge and training, and you trust them to make good decisions for you.
For their part, the professionals are obligated to be diligent and act in good faith for you, using their superior knowledge and expertise in that particular field. When they violate your trust by taking advantage of you somehow, in a way that you might not immediately recognize, they can be held legally liable for any losses you sustain.
When that professional is a stockbroker, breach of fiduciary duty can arise when the broker has discretionary authority for managing your account. When you set up your account, you give the broker information about your risk preferences, as well as about your tax needs and income situation, and this should be the basis for the broker’s investment decisions for you.
If you give written permission for him or her to make trades for you without necessarily speaking with you each separate time, then that trading should be based on the overall conditions that you give when you open the account. If they’re not, the broker can be held liable for breach of fiduciary duty.
What Is a Breach of Fiduciary Duty?
There are many ways a broker can break that fiduciary trust, all of which can cause enormous loss for you as their customer. These include:
Breach of fiduciary duty can be pinpointed to certain circumstances, such as when your broker:
- Gives you investment advice
- Carries out your investment orders
- Exercises discretionary authority in your account
In those situations, you’re relying on your broker’s knowledge, honesty, and professionalism, and paying him or her for those things. When a person is a fiduciary, higher standards are imposed on him than average.
If you find your broker has been trading in violation of the basic rules of your account and if you lose money as a result of that, you have the right to file a lawsuit. At Colling Gilbert Wright & Carter, we have a lot of experience acting on behalf of the victims of financial malfeasance. Call (855) 880-4741 or contact us online for a free initial review of your claim.