Who Can Be Held Liable in FINRA Conduct Cases? - Transcript

Dedicated New York Securities Lawyers Holding Financial Professionals and Brokerage Firms Accountable for Their Wrongdoing
When misconduct occurs in the securities industry, liability often extends beyond the individuals directly involved. In FINRA (Financial Industry Regulatory Authority) cases, both individual brokers and brokerage firms can be held accountable. At Malecki Law, our New York securities lawyers help victims hold the appropriate parties accountable because we believe it is not fair to leave individual investors on the hook for another’s dishonesty, especially when there are substantial financial losses at stake.

Individual liability in FINRA conduct cases typically arises from brokers or financial professionals who actively breach FINRA’s rules. These violations may include unauthorized trading, misrepresentation, and/or the inappropriate recommendation of high-risk investments that do not are not in the client’s best interests.

For example, a broker might mislead clients about the risks of an investment to secure a sale of that investment, causing substantial financial losses. Such actions directly breach FINRA's Conduct Rules, which require brokers to act in the best interest of their clients and provide full and accurate disclosures.

At Malecki Law, we work with clients to identify and document these breaches, ensuring that individuals responsible for wrongful conduct are held liable. By pursuing arbitration or litigation, we aim to recover losses and hold brokers accountable for their actions.

Brokerage firms can also be held liable in FINRA conduct cases, even if they did not directly participate in the misconduct. FINRA rules require firms to establish and enforce adequate supervisory systems to monitor their employees’ activities. When a firm fails to supervise its brokers effectively, it can create an environment where misconduct goes unchecked, leading to harm for investors.

For instance, a brokerage firm may lack the policies and procedures necessary to detect unauthorized trades or conflicts of interest. Alternatively, a firm might ignore red flags, such as unusually high trading volumes or customer complaints, that could indicate a problem. These failures to supervise can result in liability under FINRA rules.

Malecki Law has extensive experience in handling claims against brokerage firms, holding them accountable for neglecting their oversight responsibilities. We help clients investigate whether a firm’s lack of supervision contributed to their losses, building strong cases to recoup clients’ losses. .

To minimize liability in FINRA cases, brokerage firms are expected to implement robust compliance programs, which include:

• Comprehensive written policies and procedures.
• Routine audits to identify and address potential risks.
• Adequate training for brokers and other employees.
• Systems for promptly addressing customer complaints or unusual account activity.

When firms fail to meet these standards, they jeopardize the financial well-being of their clients and undermine the integrity of the securities industry. At Malecki Law, we assist victims in understanding how firm negligence may have contributed to their losses and fight to hold these entities accountable.

Both individual brokers and brokerage firms can be held liable in FINRA conduct cases, depending on the nature of the misconduct and the supervisory failures involved. If you have suffered losses due to a breach of FINRA rules, the experienced attorneys at Malecki Law are here to help. With over 20 years of experience in securities law, we are committed to pursuing justice for plaintiffs and ensuring that wrongdoers are held accountable.

To discuss your case with a New York securities law attorney, call Malecki Law at 212-943-1233 or complete the firm’s confidential online contact form today. Your rights and financial future deserve protection, and Malecki Law is here to fight for you.

Both individuals and brokerage firms can be held liable for breach of the conduct rules the individuals obviously are the people that that actively breach the rules themselves and the firms failed to supervise the conduct that caused the breach and arguably should have had policies procedures and reports in place to identify wrongful conduct.