Financial advisors and securities firms often have fiduciary duties to their clients. A fiduciary is obligated to place the interests of the person to whom he owes the fiduciary duty (the investor) above his own interests. Thus, your financial advisor may have a legal duty to place your interests above his own when giving you investment advice. Financial advisors are generally considered to owe fiduciary duties when exercising discretion or making investment recommendations. Fifty-six percent (56%) of FINRA arbitrations filed in 2010 included a breach of fiduciary duty claim.
Self-dealing, which occurs when a financial advisor or securities firm recommends an investment only because the advisor or firm will make larger fees, may be a breach of fiduciary duty. A financial advisor cannot take advantage of his position by acting for his own interests and not for the interests of the investor. Advisors and others involved in recommending an investment are certainly entitled and expected to make fees on the transaction. However, the size and nature of their fees should be disclosed to the investor. Especially with private placements and other non-traditional investments, promoters may have financial interests that are not adequately disclosed to investors or that create incentives contrary to the investors’ best interests.
Another form of breach of fiduciary duty involves trusts or similar situation. Trustees must comply with the trust documents and also act according to their legal duties, including the duties to avoid waste of trust assets, to use care in exercising their powers as trustee, and to act in the best interest of the trust beneficiary.
The investment and securities fraud attorneys at Moulton, Wilson & Arney, LLP have extensive experience representing individual investors in securities arbitration and litigation. Cindy Moulton, Mike Wilson and Lance Arney have successfully represented thousands of clients in securities and investment fraud cases, with combined claims of hundreds of millions of dollars.
If you have suffered an investment loss due to a Breach of Fiduciary Duty, you may be entitled to recover all or part of your investment.