Breach of Fiduciary Duty
- What Is a Fiduciary Duty?
- Does My Broker/Advisor Owe Me a Fiduciary Duty?
- How Do I Know if My Broker/Advisor Breached the Duties It Owes Me?
- What Should I Do if It Seems That My Broker/Advisor Breached Its Fiduciary Duties?
In the most basic terms, a fiduciary duty refers to the legal obligations that one party (the fiduciary) undertakes when it agrees to act in the best interests of another party (the beneficiary). Among these legal obligations includes a duty of care, a duty of loyalty, a duty of good faith, and a duty of confidentiality.
Duty of Care – A fiduciary must keep itself as informed as possible to ensure it is acting in the best interests of the beneficiary.
Duty of Loyalty – A fiduciary must put the interest of the beneficiary ahead of its own and must, at all times, act in the best interests of the beneficiary.
Duty of Good Faith – A fiduciary must abide by all laws, rules, and standards of conduct when acting on behalf of the beneficiary.
Duty of Confidentiality – A fiduciary must keep all information derived from or relating to the beneficiary confidential.
You entered a fiduciary relationship with your broker/advisor as soon as you entered into an investment relationship with your broker/advisor. Accordingly, your broker/advisor owes you all the previously mentioned duties as well as other duties, including a duty of disclosure to disclose to you any information that may be pertinent to your specific investments or portfolio, generally.
There is a litany of ways a broker/advisor can breach the fiduciary duties it owes a customer. Common breaches of fiduciary duties in the investment relationship include: a broker engaging in self-dealing by prioritizing its own profits over those of the customer, a broker recommending investments that are not aligned with a customer’s investment objectives, a broker making guarantees about the anticipated performance of a security, or a broker failing to disclose relevant information about an investment to a customer.
If your broker/advisor has failed to act in your best interests, it is highly recommended that you consult an attorney with a background in Securities Law, like the ones at Malecki Law. Depending on the merits of your case, you may be able to recover losses that occurred as a result of your broker/advisor breaching the fiduciary duties it owed to you.