Investment firms have a duty to supervise their employees, including brokers and financial advisors. Managers must exercise reasonable care to prevent and detect violations of the law or FINRA regulations by brokers. A firm must implement and enforce policies and procedures to protect its customers from fraudulent practices.
FINRA rules generally prohibit financial advisors registered with a securities firm (broker-dealer) from soliciting investors to buy securities outside of their account at the securities firm or without the firm's knowledge. When a broker does so, it is called “selling away.” Selling away is prohibited because it interferes with the firm's ability to supervise its broker and the investor's investments.
The investment & securities fraud attorneys at Moulton, Wilson & Arney, LLP have extensive experience representing individual investors in securities arbitration and litigation. Moulton, Wilson & Arney, LLP have successfully represented thousands of individual investors in securities fraud lawsuits, investment fraud and arbitrations, with combined claims of hundreds of millions of dollars.
If you have suffered an investment loss due to a Failure To Supervise, you may be able to recover your money by discussing your individual loss with an experienced investment fraud attorney.