Stockbroker Duties

Reno, NV Attorney serving Nevada & California

Share:

Duty of Good Faith and Fair Dealing

Stockbrokers and financial advisors have a duty of "good faith and fair dealing," which means that advisors must have their client's best interests in mind when providing information and making recommendations.

Duty of Disclosure

Stockbrokers and financial advisors must communicate effectively to clients regarding investment details. All relevant information that an investor needs to weigh risk are essential to his decision to go forward with the investment. If important details are omitted, or not expressed properly, and the investor loses money, the broker may be liable for breach of his duty to make adequate disclosures. This duty also refers to matters of truth – brokers may not bend the truth or present misleading information.

Duty of Authorization for Trading

Brokers and financial advisors must obtain authorization from each client before trading on an account. Brokers may trade freely on a clients account, but only after receiving permission to do so.

Duty of Requirement of Suitable Recommendations

Stockbrokers and other financial advisors are required to give fair advice and recommendations that are consistent with a particular client's unique financial situation and goals. This duty is designed to protect investors from receiving inaccurate or incomplete advice that may put their money at risk. Stockbrokers have a duty to obtain detailed knowledge of a client's financial situation and investment objectives in order to advise fairly.

Duty of Special Situations

When unusual or challenging situations arise, such as options trading, trading on margin, or other special circumstances, brokers owe additional specific duties to investors.

Duty of Supervisory Responsibility

This duty refers to the responsibility of a firm or employer to properly and thoroughly supervise its brokers and advisors. Firms must be diligent in monitoring and ensuring compliance with federal conduct regulations. If an advisor is found guilty of investor or stock fraud, his or her employer may be deemed at fault if they failed to supervise the employee in question.


The Financial Industry Regulatory Authority sets forth a standard by which all stockbrokers must follow: "A member, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade."

Honesty and integrity are needed to provide straightforward financial advice and to allow consumers to make sound financial decisions. When stockbrokers fail to live up to their duties, investors can suffer devastating financial losses. If investors become the victim of an advisor's breach of duties, there are legal remedies available. In the wake of stock fraud or broker misconduct, investors' rights are protected under securities acts, and defended by stock fraud lawyers like Thomas Bradley.

Consult an experienced stock fraud lawyer to find out if your stockbroker or financial advisor ignored his or her duties to clients. Contact the Law Office of Thomas C. Bradley online or by phone at (775) 323-5178, serving San Francisco, Sacramento, Oakland, California and Reno, Nevada, today for your free consultation.