Financial Loss Due To A Securities Broker’s Negligence–
Brokers Are Human, But Are They Allowed To Make Mistakes?

Investors place a significant amount of trust in their securities broker. It’s assumed a broker will research companies and investments, watch markets and monitor client accounts on a consistent basis to avoid unnecessary financial losses.
Certainly, many brokers provide top-notch service to their investors. However, brokers can make mistakes from time to time. Unfortunately, negligence, even if accidental, can have a significant negative financial impact.

Potential errors or oversight may include:

-buying an investment that was too risky for the customer’s needs or tolerance, or failing to notify a customer of the risks of a potential investment
-failing to monitor an account properly or perform due diligence on the account or investment
-failing to warn a client to take immediate action to correct a problem that led to an unnecessary financial loss
-failing to notice potential fraudulent activity or failing to recognize potential red flags
-recommending an investment without proper evaluation
-failing to properly diversify a client’s portfolio

While anyone can make a mistake, it’s important to determine if you broker or financial advisor is legally bound to fiduciary duties or specific standards of care. A broker’s mistake could possibly be deemed negligent if it leads to financial loss, including monetary loss from money that could have been gained if the account(s) were handled properly.

A negligence claim requires the following elements:

-determination of the specific duty owed to the investor (not all brokers require a fiduciary duty)
-proof that the broker breached their duty owed to the client or clients
-proof that the breach caused the damage
-proof and specifics of damages suffered (financial loss or loss of potential financial gain)

It is not necessary to prove the act was intentional.

For more information on this topic, visit Financial Industry Regulatory Authority’s (FINRA) investors problem page:

If you have questions about broker misconduct,  broker negligence or about your broker’s management of your account, please contact our Securities Fraud Law Offices at 313-962-7777 for a case evaluation.