Generally, brokers and other financial professionals have a duty to follow your instructions regarding the entry and execution of orders. A failure to follow your instructions, both as directed and in a timely manner, is a violation of industry rules, and may even result in a breach of the broker's fiduciary duty to you. While there is some debate about whether a stockbroker is a fiduciary for the entire broker/investor relationship, depending on the facts and circumstances, the law in most states is clear that a broker owes you a fiduciary duty from the time you give or authorize an order until the execution of that order. If you incur financial harm due to your broker's failure to follow your instructions, you are entitled to seek damages, fees, and costs stemming from those losses. If you give your broker an order to buy or sell a specific investment, and the broker fails to timely submit that order or fails to submit the order with the correct terms (price, number of shares, type of order- market order, limit order, good til canceled), the broker violated his or her duty to you.
Timeliness is especially important when buying and selling securities, and a broker's failure to act promptly could cost you significantly. FINRA has specific rules that address handling your account on a discretionary basis. Stated simply, your broker must have WRITTEN APPROVAL to exercise any discretion when buying or selling securities on your behalf, and that written grant of discretion must be approved by the brokerage firm. Claims related to a broker's discretion, or lack thereof, are often referred to as "Unauthorized Use of Discretion, " and FINRA makes clear that such practice is a violation of its rules and protocols. Many brokers still use what is often referred to as "time and price discretion, " which describes a practice whereby a broker might get your permission to buy a certain stock, but the price, number of shares, and the time of day or the day of the week the broker submits the order to the market is left to the discretion of the broker. While this may have been accepted, even permissible in a prior era, it is impermissible now.
Stoltmann is a member of AAJ (American Association of Justice), the Chicago Bar Association, Illinois State Bar Association and is admitted to the United States District Court for the Northern District of Illinois and the Eastern District of Wisconsin. Email: Phone: 312. 332. 4200
Elderly investors have been misinformed by their brokers, only to find that their purchased variable annuities do not pay out for years, or that it offers just the same tax protection as to IRA's and 401k plans. According to FINRA, scare tactics are often used in sales pitches for variable annuities, even if those facts are untrue. In the current economic downturn, some brokers are falsely claiming that variable annuities will protect investors from lawsuits or seizures of assets.
This strategy was in most instances very unwise because it exposed the investor to the possible loss of a substantial portion of his or her net worth in the event that the company's stock share price fell. Additionally, many brokers overlooked or failed to recommend strategies known as "zero cost collars" and "variable prepaid forward contracts" to investors whose investments in employer stock could have been safeguarded via utilization of these strategies. Many investors suffered substantial losses because of brokers' poor advice to "exercise and hold" and/or failure to recommend diversification and/or appropriate hedging strategies. Stock Broker Arbitration Claims Arbitration claims can involve all types of investments, including stocks, bonds, annuities, and mutual funds. Most customer claims against stockbrokers and financial "advisers" or "consultants" are required to be brought in arbitration before the Financial Industry Regulatory Authority (FINRA) rather than in court. The cases take about one year to complete and are decided at a hearing before either one or three arbitrators, depending on the size of the claim.
I am not beholden to major brokerages, the government or the big law firms that may have interests that conflict with yours. As a result, I can represent your interests only — whether you are a broker seeking to defeat allegations of fraud or other misconduct, or an investor who wishes to pursue compensation.