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3 ways in which a broker might breach their fiduciary duty

On Behalf of | May 22, 2024 | Business Law |

If you take on a broker to manage your financial affairs, being able to trust them is essential. Unfortunately, sometimes you can’t. A broker may act in ways that breach the bond of trust and with it, the fiduciary duty they have toward you.

A fiduciary duty means they have a legal obligation to act in your best interests. If you discover they have been doing any of the following, you may need to hold them to account for breaching their fiduciary duty toward you:

They steal from you

An unscrupulous broker may use the opportunities you give them to steal some of your funds. If you believe your balance is lower than it should be or that the returns you made are not as high as they should be, then it’s worth considering whether your broker has creamed something off the top. 

They let self-interest get in the way

Your broker advises you to move your money into a particular set of stocks. When things go badly you question why they ever made this recommendation. Then you discover that the company the stocks were in belongs to a friend of theirs or to someone who was paying them a commission to convince people to put money into them. Your broker has to make the appropriate recommendations for you, not ones that serve them.

They fail to give you sufficient accurate information about an investment

“Put your money here,” they said. “It’s low risk and could do really well.” Yet it does awfully and on doing some research, you discover that there is no way that investment could have been considered low risk. A high-risk strategy might be fine for some people, but your broker has a duty to be honest and not push you toward investments beyond the risk you are comfortable with.

Of course, if you accuse your broker of breaching their fiduciary duty toward you, they will likely deny it and come up with all sorts of reasons why events beyond their control caused things to go badly for you. If you want to hold them responsible you’ll need experienced legal help to build a strong case.

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