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 goals and circumstances and honestly provide all material information about the potential risks and upsides of the investments when recommending purchases and sales. When an investment adviser exercises discretion over an investor’s securities portfolio holdings, the law treats the investment adviser as the investor’s agent and imposes an ongoing duty to the investor, which includes the requirements to warn the investor of changed market conditions and to adjust investment strategies in response to changed circumstances. Broker-dealers and investment advisers who engage in self-dealing or fail to disclose conflicts of interest can be held liable for breach of fiduciary duty in securities litigation and violation of FINRA Rule 2010 in FINRA arbitration.
Contact the attorneys at Rosenberger + Kawabata if you believe you have incurred investment losses as a result of unsuitable investments.