Investment advisors often have a fiduciary obligation to their clients. Depending on the nature of the relationship between the client and the advisor, this fiduciary obligation could be stronger in some cases. When a broker or advisor is dishonest and makes decisions for their client that are not in the client’s best interests, the advisor will have breached their fiduciary obligations and could be financially liable for the damages caused by this breach.
Interestingly, the advisor and/or broker is not the only one who will be liable in these cases. The investment firm will also be responsible for the damages caused by its employee.
Here are two examples of potential fiduciary violations:
A broker sells unsuitable investments to earn a profit or commission: It’s not uncommon for certain types of investments to garner a stockbroker large commissions. Often, risky and “designer” investment products give the brokers who sell them the largest commissions in the industry. Selling such an investment to a client who requires safe and secure investments would be unsuitable, and it could represent a violation of the broker’s fiduciary duty to the client.
A broker commits “annuity switching” fraud: Another common type of investment fraud is known as “annuity switching.” This happens when a broker switches out one annuity for another, even though there is no rational basis for doing so. Investment advisors sometimes recommend such transactions simply to churn a profit for themselves to the determent of their client.
Do you feel that your broker took actions on your behalf or made recommendations that did not support your best interests? You may want to discuss the facts of your case with an experienced attorney.