Stockbrokers and investment professionals owe their clients certain fiduciary duties, most of which are apparent and obvious, including the duty not to lye, steal or cheat, or to place their interests or those of their employers ahead of the your financial interests.

Specifically, the federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects, or to guaranty against losses.


Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. Omissions include such things as the broker’s failure to disclose that they are receiving more compensation from the sale of a particular security than another security, or the failure to disclose that the broker or brokerage firm failed to conduct any meaningful due diligence with respect to the recommendation to purchase a particular security.

A statement is material if it assumes actual significance in the deliberations of a reasonable investor.

A Half Truth is Still a Whole Lie

There are other forms of stockbroker misconduct, which are actionable under the law including the federal securities laws, including claims for the sale of overly risky or otherwise unsuitable securities, breach of fiduciary duty, fraud in connection with the sale of mutual funds or structured products, the sale of unregistered securities, and variable annuity fraud.

Brokerage firms are also responsible for the misconduct of their agents under the common law, as control persons under the federal securities laws and based upon the failure to supervise the conduct and activities of the stockbroker, which for a variety of reasons, may have been intentionally ignored.

If you have been the victim of stockbroker misconduct, you may be able to file a legal action in arbitration against your stockbroker and their employer to recover your investment losses.

Stockbroker Negligence

Stockbrokers and investment professionals have a duty, and with that duty comes a standard of care which is established by the federal securities laws, and self-regulatory rules as promulgated by the NASD and the NYSE. When a broker deviates from that standard of care, the customer has a claim for Stockbroker negligence, or stockbroker malpractice, which is a form of misconduct.

Moreover, there is a duty of loyalty and good faith in a traditional broker/customer relationship.

These duties include:

  • The duty to recommend a stock only after studying it sufficiently to become informed as to its nature, price and financial prognosis.
  • The duty to inform the customer of the risks involved in purchasing and selling particular securities.
  • The duty not to misrepresent or omit any fact material to the transaction.
  • The duty to study, analyze, and/or otherwise become informed as to the nature, price, and/or financial prognosis of the stocks purchased for Claimant’s account;
  • The duty to inform Claimant, and indeed misrepresenting the risks involved in purchasing and/or selling speculative securities;
  • The duty to follow Claimant’s expressed investment objectives and conservative investment strategy;
  • The duty not to engage in speculative trading or fail to properly diversify;
  • The duty not to place putting their own financial interests above those of their clients.

When the stockbroker breaches these duties, the stockbroker and the employing securities brokerage firm with whom the stockbroker is associated is responsible for stockbroker negligence.

Guiliano Law Firm

Our practice is limited to the representation of investors in claims against stockbrokers and investment professionals for misconduct and negligence, and we accept the representation of clients on a contingent fee basis.

If you have suffered investment losses as a result of stockbroker misconduct or negligence, contact us for a confidential fee evaluation of your claim at (877) SEC-ATTY.