Breach of Fiduciary Duty

Fiduciary duty forms the foundation of trust in financial relationships, ensuring that brokers and advisors prioritize their clients’ best interests. However, when this duty is breached, it can lead to significant financial and emotional harm for investors. At Malecki Law, our securities lawyers are committed to standing up for investors and holding financial professionals accountable when they fail to fulfill their obligations.

A fiduciary duty is a legal obligation requiring one party to act in the best interests of another. In the financial industry, brokers and advisors may owe fiduciary duties to their clients, depending on the nature of their relationship. These duties include:

• Duty of Loyalty: The fiduciary must prioritize the client’s interests over their own.
• Duty of Care: The fiduciary must provide advice and services with the level of competence and diligence that a reasonable professional would.
• Duty of Full Disclosure: The fiduciary must disclose all material facts and conflicts of interest.

Whether your broker or advisor owes you a fiduciary duty depends on several factors. Registered Investment Advisors (RIAs), for example, are held to a fiduciary standard under the Investment Advisers Act of 1940. Brokers, on the other hand, are generally subject to a “best interest” standard under Regulation Best Interest (Reg BI). This standard is similar to a fiduciary duty but may not impose the same level of obligation in every circumstance.

However, fiduciary duties can arise from:

• Contractual Agreements: Specific terms in your agreement may impose fiduciary responsibilities.
• Discretionary Accounts: If you grant your broker discretion to make investment decisions, a fiduciary duty may apply.
• State Laws: Certain state laws impose fiduciary obligations on financial professionals.

Breaches of fiduciary duty can take many forms, including:

• Conflicts of Interest: Recommending investments that benefit the broker or advisor more than the client.
• Failure to Disclose Risks: Omitting material information that could affect the client’s decision-making.
• Unsuitable Recommendations: Advising investments that do not align with the client’s financial goals, risk tolerance, or investment profile.
• Excessive Fees: Charging unreasonable or hidden fees that erode the client’s returns.
• Negligent Management: Failing to properly monitor and manage the client’s portfolio.

Identifying a breach requires careful analysis of account statements, communication records, and the terms of your agreement. Malecki Law’s experienced securities attorneys can help you assess whether your broker or advisor violated their fiduciary duties.

If you suspect a breach of fiduciary duty, taking immediate action is crucial to protect your investments and interests. Here are the steps to follow:

1. Document Everything: Gather all relevant documents, including account statements, contracts, emails, and records of communication.
2. Consult an Attorney: Contact Malecki Law for a comprehensive review of your case. Our attorneys specialize in identifying breaches of fiduciary duty and will guide you through your legal options.
3. File a Complaint: If warranted, you may file a complaint with FINRA or the SEC. Your attorney can ensure that your claim is properly documented and submitted.
4. Seek Compensation: Pursue legal remedies, such as arbitration or litigation, to recover your financial losses.

Malecki Law has a proven track record of holding financial professionals accountable for breaches of fiduciary duty. Our dedicated team understands the complexities of securities law and is committed to securing justice for investors. If you believe your broker or advisor failed to act in your best interests, call Malecki Law at (212) 943-1233 or email jenice@maleckilaw.com for a free consultation. We are here to protect your rights and help you recover your losses.