A stock broker has ethical and professional responsibilities to his or her clients. Although the vast majority of complaints regarding stock brokers’ behavior are triggered when an investor’s portfolio diminishes in value, a broker is typically not liable solely on that basis. However, if you are a broker, a Securities Fraud Attorney in Tampa will advise you that being keenly aware of the following issues can maintain your work above reproach and may prove beneficial in minimizing losses.
Although generic in nature, you can do no wrong when all dealings are conducted with the highest degree of honor and integrity.
There is often an inherent conflict when you are compensated based on transactions executed. Excessive trading in an account raises the question of whether the activity is in your interests or the client’s interests.
Recommendations about buying or selling should be based on an understanding of and a reasonable belief that the advice is suitable for that particular client. A securities fraud attorney in Tampa indicates that “suitability” includes:
- Investment objectives, such as long and short term goals
- Financial and tax status
- Risk tolerance
- Personal preferences
It is imperative for you as a broker to disclose all material information in regard to an investment you may recommend. The object is to provide the investor with everything needed to make an informed decision. In an effort to be truthful, while it may seem obvious that false or misleading claims are improper, exaggerated claims about a particular investment’s potential should also be avoided.
Authorization can be a bit of a gray area; although the clear rule is that you may not make any unauthorized trades, some investors assign to their broker discretionary power to make decisions regarding the account. Typically, a discretionary disclosure form is signed providing certain guidelines. Although you do have some latitude, the guidelines must be followed.
Duties of the Brokerage Firm
The brokerage firm has a duty to oversee each of its brokers as well as ensure the information provided to the brokers is accurate. Many investors place their confidence you as a broker primarily on his or her association with a well-known brokerage firm.
Contact a Securities Fraud Attorney in Tampa for Legal Advice
Investors place their trust and confidence in brokers like you. All brokers should treat each client with the highest standards of professional integrity. For any more answers from a securities fraud attorney in Tampa regarding these issues call Robert Savage at 813-200-0013.