California Breach of Fiduciary Duty Lawyers
Broker-dealers and investment advisers owe duties to the investors who hire them. The law requires them to recommend purchases and sales of securities only if those transactions are suitable for the investor’s financial situation, risk tolerance, and investment objectives, and to provide honest, complete information about the potential risks and rewards of any recommendation.
When an investment adviser exercises discretion over a client’s portfolio, the law treats the adviser as a fiduciary. That imposes an ongoing duty to monitor the portfolio, warn the investor of changed market conditions, and adjust investment strategies as circumstances change. A broker who parks a retiree’s savings in speculative positions and walks away has breached that duty whether or not the positions were suitable at the time of purchase.
Broker-dealers and investment advisers who engage in self-dealing, recommend products that pay them higher commissions without regard to suitability, or fail to disclose material conflicts of interest can be held liable for breach of fiduciary duty in securities litigation and for violations of FINRA rules, including Reg BI and FINRA Rule 2111, in FINRA arbitration.
How We Pursue These Claims
We analyze trading records, account statements, and compensation structures to identify the specific breaches and calculate losses. Where the broker’s recommendations served the broker’s financial interest rather than the client’s, the evidence typically shows it in the commissions, fees, and trading patterns.
FAQs
What is the difference between suitability and fiduciary duty?
Suitability requires that a recommendation be appropriate for the investor at the time it is made, based on the investor’s age, financial condition, risk tolerance, and objectives. Fiduciary duty goes further: it requires the adviser to act in the investor’s best interest on an ongoing basis, including a duty to monitor the portfolio and disclose conflicts of interest. Discretionary accounts generally impose fiduciary duties; non-discretionary accounts are governed by the suitability standard (and, since 2020, by Reg BI).
Can I sue my broker for recommending unsuitable investments?
Yes. If a broker-dealer or investment adviser recommended investments that were not suitable for your financial situation or objectives, you can pursue a claim in FINRA arbitration for breach of fiduciary duty, violation of the suitability rules, and related causes of action. The primary remedy is compensatory damages: the difference between what your account would have been worth with suitable investments and what it is actually worth.
Talk to a California Breach of Fiduciary Duty Lawyer
If you believe your broker or investment adviser put their interests ahead of yours, contact Rosenberger + Kawabata. Call (310) 894-6921 or submit an inquiry through our contact form.