Stock Broker Complaints - Your Best Defense

As an investor, you may have caught wind of a new initiative among legislators and regulators who wish to more closely bind your interests to your stockbroker’s. Wait - you thought your stockbroker always had your best interest in mind when it came to how he or she invested your money…? Well, not exactly.

Fiduciary vs Order-Taker: Financial Relationships

For years a battle has been waged between investors (and their advocates - ie, attorneys) and the broker-dealer industry over whether brokers have a fiduciary duty to their clients. A fiduciary duty is a legal obligation to act solely and faithfully in another’s best interest, typically a client’s best interest. Brokerage firms however will often insist, during a dispute over misconduct or malfeasance, that they do not have such a duty; that they are rather simply order-takers executing the wishes of their clients.

If this information comes as a shock to you, well - it should. Brokerage firms and stock brokers take great pains to gloss over the structural asymmetry in their relationship with clients. It’s a big, big fault line in our financial industry. Besides, what investor would open an account at a brokerage firm that claims to act in your best interest “some of the time, but not always.”

Broker Customer Complaint Database

Another big not-so-open secret within the securities industry is that many big-name brokerage houses and many, many individual brokers and financial advisors have racked up a long list of customer complaints, which, unfortunately, most customers do not know about. According to a recent New York Times article:

■ Among brokers employed from 2005 to 2015, 7.28 percent had at least one disclosure in their industry records for a settled consumer complaint or worse.

■ Many household-name firms have double the percentage of brokers with such marks. Oppenheimer tops the list at 19.6 percent.

■ Five of the 10 counties with the highest percentage of brokers with disclosures are in Florida.

These complaints are recorded in a database kept by securities industry watchdog, FINRA (the Financial Industry Regulatory Authority). For any investor who would like to do the equivalent of a background check on your broker or any broker or firm, you can visit the database at BrokerCheck. Until the government enforces the fiduciary duty relationship between brokers and clients, the best thing any investor can do to protect their retirement savings is carefully research their broker and firm via BrokerCheck. Even though, however, you can never be sure when your best interest and their best interest will be aligned. Not yet, anyway.


Pennsylvania & New Jersey Securities Litigation Lawyers

If you or someone you know has been the victim of investment fraud or broker misconduct, please contact our experienced team of financial loss attorneys at 1-866-462-3330 or via our online contact form.

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