Breach of Promise/Contract

Brokers Sign Binding Agreements With Their Clients

Though many types of recognized grounds exist for recovering losses from brokers or their firms, one of the most clearly defined bases for recovering losses is a breach of promise or contract. When you enter into a relationship with a registered broker and firm, it is generally begun with the signing of a contract between you and the firm. This contract includes, either directly or by operation of law, a duty of good faith and fair dealing and the broker’s and the firm’s promise to act in accordance with all rules of the Securities and Exchange Commission (SEC), FINRA, and all applicable federal and state securities laws. Thus, in most cases of violations of securities laws, a claim for recovery can also include an assertion of breach of contract. These contracts are legally binding representations of your broker’s basic obligations to you, the client. If your broker or firm has violated the terms of your contract, you may have grounds to recover your resulting losses.

Another Contract Obligation Should Be Noted

Along with commitments to observe all rules of the securities industry, brokerage firm contracts usually include an arbitration clause. This clause stipulates that all issues with a broker’s performance must be pursued through arbitration rather than litigation. This clause generally means that, as a result of signing the contract with your broker, you must pursue any claim against the broker in arbitration. FINRA securities arbitrations do have a six-year “eligibility period,” which makes contacting our firm promptly for a free case evaluation even more important. The time during which you may pursue a claim becomes more limited every day. A swift start to the process is important to ensure you have an opportunity to pursue fully all means available to you.

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