Breach of Fiduciary Duty

The costs of investment fraud effect everyone.

Do you suspect your investment adviser failed to act in your best interests? If so, you might have grounds for a legal claim against them due to their breach of fiduciary duty. Investment advisers owe their clients a fiduciary duty of care, meaning they are responsible for acting in a client’s best interests when recommending, purchasing, and selling financial instruments. They must execute transactions for your benefit.

If your investment adviser failed to uphold their duty and caused you to lose money, a broker misconduct lawyer with Erez Law, PLLC can help you hold the brokerage firm accountable. Our firm has the experience, resources, and skill to seek fair compensation for your financial losses. Contact us for a free consultation to learn more about your legal options.

What Does Breach of Fiduciary Duty Mean?

A fiduciary is a person or organization in a position of trust who is required to act in your best interests and is bound by legal and ethical obligations, which comprise the fiduciary duty. Those who are in a fiduciary role are held to a higher standard than others without a fiduciary duty. If they violate the fiduciary duty and you suffer losses as a result, you may be able to pursue compensation from them and the brokerage firm that hired them.

Interpretations from the United States Securities and Exchange Commission (SEC) on fiduciary duties say that investment advisors must do the following:

  • Act in the investor’s best interests and not place their own interests or those of their firm in front of the investor’s interests
  • Understand the potential risks, rewards, and costs associated with an investment or investment strategy before making any recommendations
  • Have a reasonable understanding of the investor, their investment profile, their objectives, and other relevant characteristics
  • Consider the investment in light of the investor’s profile and objectives, along with other available alternatives when recommending an investment
  • Conduct a reasonable investigation into the investment so that they do not base their advice on materially inaccurate or incomplete information
  • Have a reasonable belief their advice is in the best interest of the investor based on a reasonable understanding of the investor’s objectives based on the specific facts and circumstances
  • Disclose they are acting as investment advisers
  • Identify conflicts and factors that could create risk and design policies and procedures to address these risks
  • Avoid compensation thresholds that encourage opening certain types of accounts
  • Implement supervisory procedures to monitor recommendations involving the transfer of assets from one account to another
  • Adopt and implement policies and procedures that are reasonably designed to minimize or eliminate incentives that encourage brokers to favor certain account types over others
  • Adjust compensation for financial professionals who do not sufficiently manage conflicts of interest

As you can see, fiduciaries owe a tremendous duty to investors. Finding out how an investment adviser violated their fiduciary duty is what the experienced investment fraud lawyers at Erez Law, PLLC do. Contact us for a confidential case review so we can explain more about our investigative process.

What Are the Elements of Breach of Fiduciary Duty?

As the party seeking remuneration after a breach of fiduciary duty, you have the burden of proving the breach of fiduciary duty occurred by presenting sufficient evidence to establish the facts are more likely than not as you assert them to be. Our experienced investment fraud lawyers can help you establish the legal elements of a breach of fiduciary duty claim.

To prove a breach of fiduciary duty, we must establish the following four legal elements:

  1. The investment adviser owed you a fiduciary duty – If the investment adviser accepts payment through a fee, rather than a commission, they are acting as an investment adviser and owe you a fiduciary duty.
  2. The fiduciary violated the fiduciary duty – You must show with particularity what the investment adviser did to violate the fiduciary duty. Did they place their interests above your own? Did they fail to disclose material information? Did they buy and sell investments just to garner a larger fee?
  3. You suffered harm – You must have suffered some type of harm because your investment adviser breached their fiduciary duty, such as lost investments or a diminished value of your assets.
  4. The breach of fiduciary duty caused you harm – You must prove the investment adviser’s breach of fiduciary duty directly caused you to suffer damages.

Our nationally-recognized investment fraud attorneys can help you establish these elements and seek the compensation you deserve.

Who Owes a Fiduciary Duty to Investors?

Investment advisers are subject to the SEC’s fiduciary duty standard under federal law. When brokers charge a fee for their services (rather than a commission), they are acting as advisers and are subject to the fiduciary duty under federal law. Most brokers at brokerage firms manage money on a fee basis, so they are considered advisers. If you pay a commission per investment, state law determines whether the relationship is subject to a fiduciary duty.

What Happens When There Is a Breach of Fiduciary Duty?

If an investment adviser violates their fiduciary duty, you may be able to take legal action against them and pursue compensation for the losses you’ve experienced. Additionally, you can take action against the firms they work for because they may be liable for the losses or damages their brokers caused.

Contact Erez Law, PLLC for Help with Your Breach of Fiduciary Duty Claim

If an investment adviser violates their fiduciary duty while managing your investments, you deserve accountability. The good news is that the attorneys at Erez Law, PLLC can help you seek compensation for your losses. We take cases nationwide. We have helped recover more than $200 million for our clients around the world. Contact our firm today for a free, no-obligation case review.