A Broker May Be Held Liable for Negligent Actions

Brokerage firms and those they supervise are required to act with your best interest in mind, and adhere to all standards and regulations of the securities industry. Investors should be able to trust registered brokers to handle their investments with reasonable care and due diligence. If your broker did not act in your best interest, they may be liable for your losses even if their poor guidance was not clearly intended to cause harm. If a reasonable person could have foreseen potential negative consequences, acting in a manner that results in such negative consequences can be the grounds for a negligence claim.

A Higher Standard of Care

The relationship between a broker and their client is one that is held to a higher standard of care than the average relationship. Clients must invest an immense amount of trust in their broker, and it should be reasonable that this trust is well-founded. When a broker violates that trust with negligent actions, the client may have grounds for a claim to recover their resulting losses. Oftentimes there is overlap with other types of claims when negligence is involved. Examples of actions that can lead to negligence claims include:

  • Failure to recommend suitable investments for a client
  • Brokerage firm failing to supervise their representative
  • Failure to perform due diligence on the client’s portfolio

Both brokerage firms and brokers can be found responsible for negligent actions that led to net losses, so in a situation where a recovery of damages occurs the compensation may come from either firm or broker.

Explore Your Own Claim

Many claims for recovering investment losses involve an aspect of negligent actions on the behalf of either brokerage firm or broker. If you have suffered losses and believe it may be due to negligence, contact our firm today for a free consultation. Your consultation will be confidential, and it is the first step in the process of recovering your losses.

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