Investments are not guaranteed, but one thing is certain: your broker or financial advisor should follow your instructions. Unfortunately, some brokers act without authorization. They may buy or sell securities, change strategies, or expose you to risks you never agreed to take, which can seriously harm your portfolio.
When a broker’s failure to follow instructions results in significant financial losses, it may be investment fraud. If you believe your broker disregarded your instructions, you have the right to seek recovery.
Erez Law, PLLC’s investment fraud lawyers have recovered over $300 million for investors nationwide. With over 35 years of experience and more than 1,000 successful arbitration cases, we possess the knowledge and proven track record to help clients achieve a fair outcome. Our practice focuses on securities fraud, investment fraud, and breach of contract cases. Contact us today for a free, no-obligation consultation.
What Does “Failure to Follow Client Instructions” Mean?
Brokers are legally obligated to act in accordance with their clients’ explicit directions. Investors often provide specific instructions to brokers or financial advisors about how to manage their investment accounts. These instructions typically include the types of investments they’re interested in, risk levels, and approved strategies.
While your broker may exercise discretion when buying or selling securities on your behalf, they need your written approval before they can take action. Additionally, the brokerage firm must approve the grant of discretion before your broker can proceed. Failing to follow client instructions and brokerage procedures can violate your trust and may constitute professional misconduct.
A case involving securities fraud due to failure to follow direction may include any of the following:
- Unauthorized buying or selling of securities
- Trading at the wrong price or for the wrong number of shares
- Placing market orders instead of limit orders
- Failing to make a trade within a designated period
- Ignoring the client’s risk tolerance instructions
- Trading outside the agreed investment strategy
- Making significant changes to the client’s portfolio without consent
Even well-intentioned deviations can result in investment failure. Furthermore, failure to follow client instructions breaches a broker’s fiduciary duties and contractual obligations. Brokers are required to put their clients’ interests first. They also must honor the specific agreements they’ve made with each client. If they act outside these boundaries, they could be held legally responsible for any financial harm that results.
How an Investment Fraud Lawyer Can Help
When your broker’s unauthorized acts cause you financial loss, a knowledgeable investment fraud lawyer at Erez Law, PLLC can help you seek recovery. Our firm can:
- Investigate the broker’s conduct
- Review account documents and correspondence for evidence of unauthorized trades or changes
- Advise you on your legal options and the strength of your claim
- File and manage a FINRA arbitration case
- Pursue compensation for your financial losses
When you’ve suffered financial harm, your case deserves to be fully investigated—but your choice of legal advocate matters. Investment fraud cases are complex. They typically require an in-depth review of trading records, client agreements, communications, and portfolio activity to prove that the broker acted without authorization.
Erez Law, PLLC is committed to protecting your financial future and fighting back against broker misconduct. We understand the high financial stakes involved. We’ll work to help you pursue compensation for your losses and fight to hold even the largest financial institutions accountable.
Contact Erez Law, PLLC today, and let us help you take the next step toward recovering your losses through a failure to follow client investment instructions claim.
How Failure to Follow Instructions Can Lead to Financial Harm
A broker’s failure to follow client instructions can cause serious financial damage. Even small departures from your agreed-upon investment strategy can result in losses that could have otherwise been avoided. For example, unauthorized trades can expose you to unwanted risk. This can result in immediate financial losses, long-term damage to your investment portfolio, or both.
Similarly, failing to adhere to the chosen investment strategy can leave your portfolio vulnerable to market downturns. For instance, if you prefer a conservative investment strategy but your broker chooses high-risk securities, you stand to lose far more than you anticipated.
Finally, a broker’s failure to follow instructions isn’t limited to losses. You could also miss out on chances for monetary gain. Imagine you’ve instructed your broker to sell stocks at a favorable price, but they fail to do so. Disregarding that direction could prevent you from taking advantage of opportunities for financial growth.
Your Legal Options After a Broker Fails to Follow Instructions
When your broker breaches their contractual duty and causes you financial harm, you have the right to pursue compensation. Instead of traditional court litigation, disputes between investors and brokerage firms are typically resolved through FINRA arbitration. Unlike litigation, arbitration offers an efficient and cost-effective means for investors to present their claims and demand compensation for their losses.
FINRA, or the Financial Industry Regulatory Authority, conducts failure to follow instructions arbitration hearings. These hearings are less formal and faster than a trial. Investors can bring claims for fiduciary breaches of duty, violation of securities laws, unsuitable investment claims, and unauthorized trading claims through this forum. However, you must act quickly, as there are strict filing deadlines for FINRA arbitration claims.
If your claim is successful, you may be able to recover compensation. Failure to follow instructions cases may result in the brokerage returning your lost investment principal. You may recover lost profits and interest. In some cases, you may also be able to recover attorneys’ fees. However, every case is unique. The best way to determine which options are available in your case is to work with a skilled investment fraud lawyer for failure-to-follow-instructions claims.
Erez Law, PLLC is a nationally recognized wealth recovery law firm representing clients across the United States. We have extensive experience handling FINRA arbitration cases nationwide and are prepared to vigorously advocate for your financial recovery.
Consult an Investment Fraud Attorney Today
If you believe your broker failed to follow your investment directives, you deserve to know your legal rights and options. Our team will leave no stone unturned when investigating your claim and advocating for you.
Don’t wait to take action. Contact Erez Law, PLLC today for a free consultation to find out how we can help you seek justice.