Attorney for Victims of Stockbroker Negligence

Not all claims against stockbrokers and securities broker-dealers are the result of intentional conduct.  Often investors suffer damages as the result of negligence.

What is Stockbroker “Negligence”?

Stockbroker negligence includes the failure to conduct due diligence, and other forms of misconduct, by both the individual stockbroker or their brokerage firm, including, for example, the violation of securities rules or regulations.

Negligence does not include the failure to predict the future or opinions that are a matter of judgment, but with the benefit of hindsight turn out to be wrong.  Unlike recklessness which is the intentional disregard of a known risk, negligence is a non-intentional tort.  The elements or legal definition of negligence is (a) the existence of a duty, (b) the breach of that duty, which was (c) the foreseeable or proximate cause in fact of (d) damages.

For example, stockbrokers have a duty to have a reasonable basis to recommend certain securities to their customers.  Reasonable basis suitability means the duty of the broker to ascertain the risks and characteristics of that security.  If the stockbroker fails to conduct such an investigation, or does not have a reasonable basis to make a recommendation, and the result is damages or losses to the investor, in addition to a suitability claim, the injured investor also has a claim for stockbroker negligence.   The duty or standard of care is contained in the FINRA suitability rule. Rule 2111.

Stockbroker Negligence Claims and Damages

Historically, many courts have held that there is no private right of action for the violation of Self-Regulatory rules, but have recognized “the failure to supervise, for example, as an omission of material fact, cognizable under the Exchange Act and SEC Rule 10b-5.  However, the violation of Self-Regulatory is a breach of the standard of care. The best example is where a firm neglects to enforce or monitor rules or supervisory procedures with respect to money laundering, which results in the failure to detect the theft of customer funds by third parties.

Similarly, if a broker-dealer has a duty imposed by federal regulations to detect money laundering, third-party transfers, or the change of beneficial ownership of a securities account, although there is no private right of action and the rule or regulation does not confer upon investors the right to sue for its violation, which may belong exclusively to the government or regulator, that rule or regulation establishes the “standard of care,” or custom throughout the industry, and if as a cause or “result” of the breach of that standard of care, an investor suffers damages, the investor may have a claim for negligence.

Moreover, unlike often intentional torts, such as fraud or theft, claims for negligence are more likely to be covered by any Professional Errors & Omissions Liability Insurance for the stockbroker or their firm.

Contact Our Attorneys if You Were the Victim of Stockbroker Negligence

If you have been the victim, or think you may have been the victim of stockbroker negligence, you should consult with a securities fraud attorney to determine your legal rights.  In most states, claims for negligence, including stockbroker negligence, must be filed, absent extraordinary circumstances, within two years from the date of discovery or the date of discovery upon the exercise of reasonable diligence.

We accept the representation of investors that suffered damages as the result of stockbroker negligence on purely a contingent fee basis meaning that there is no cost to you unless we make a recovery for you.  For a free, no obligation, confidential evaluation of any stockbroker negligence claim you may have, contact us at (877) SEC-ATTY. 


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AboutNicholas Guiliano, Esq.

Nicholas J. Guiliano has more than 25 years of securities related experience, and has represented more than 1,000 public customers in claims against brokerage firms for fraud in connection with the sale of securities principally in arbitration before the Financial Industry Regulatory Authority (“FINRA”) Dispute Resolution, Inc. (formerly known as The National Association of Securities Dealers (“NASD”) Dispute Resolution, and the New York Stock Exchange (“NYSE”) Department of Arbitration.