Honesty and integrity are two qualities which are necessary in all types of businesses. Unfortunately, this is not always the case in the securities industry: many brokerage firms today use the sales of investments and securities to benefit themselves through high fees and commissions instead of doing what is in the best interest of the client. For instance, brokers may recommend expensive options such as structured products or variable annuities, putting their own priorities above those of their customers. These are suggested purely for the maximization of the financial benefits to the broker. As a result of the impact that these conflicts can have on today’s securities industry, FINRA’s Chairman and CEO Richard Ketchum addressed brokerage firms on these issues:
”…I call on you to do a better job of assessing-and disclosing-your conflicts. We understand that conflicts exist in the financial services industry. We need to take a step back, acknowledge that there are risks and look at how we can handle those conflicts…I would like to see firms do a top-to-bottom review of their business operations with the goal of addressing the conflicts of interest of every kind. You should be assessing whether your business practices place your firm’s – or your employee’s – interests ahead of your customers…I can promise you that we will have focused conversations about the conflicts you [brokerage firms] have identified and the steps you have taken to eliminate, mitigate or disclose each of them.”
Although Ketchum’s statement aptly addresses these investment conflicts, they still remain deeply integrated within brokerage firms’ daily functions. It has been suggested by some that the only appropriate way to resolve these issues is to ‘impose a mandatory INDUSTRY fiduciary duty on all brokers and brokerage firms’ like the ones that registered investment advisors must abide by. A fiduciary duty is the legal obligation of one party to act in the best interest of another. However, the solution of implementing a system such as this seems to be a distant fix, because it has only been talked about and further actions are yet to be taken.
As an investor, your financial interests should be the top priority not only for you but also for your broker and brokerage firm. If you have experienced investment losses because your broker put his or her interests before yours, then you should have the opportunity to regain your resulting financial losses. Securities and Stock Fraud Attorney Thomas C. Bradley takes your interests seriously and can help you to regain your investment losses. Call today for your free consultation.