Fiduciary Breaches

 

Did You Suffer Investment Losses Due to an Investment Advisor’s Breach of Fiduciary Duty? Contact Us Today

At Mika Meyers, PLC, our breach of fiduciary duty attorneys apply their skill and experience to protect the rights and interests of investors. A fiduciary duty is the highest standard of care under the law. Registered investment advisers (RIAs) and their Investment Advisor Representatives (IARs) are fiduciaries under federal law, and under the law of most states. We hold them accountable when they fail to live up to their fiduciary responsibilities. If you or your loved one suffered investment losses due to a breach of fiduciary duty by an investment advisor, we are here to help. Contact our law firm today at (616) 632-8000 for a free, strictly confidential initial consultation with an experienced breach of fiduciary duty lawyer.

Fiduciary Duty: Defined

As a starting point, it is crucial to understand what a fiduciary relationship is and how the fiduciary standard impacts your relationship with your financial advisor. When a person places their trust and confidence in another to provide certain services, a fiduciary relationship is created. The party who accepts the position of trust and confidence is considered a fiduciary, and assumes certain fiduciary duties to the beneficiary, including the duties of honesty, loyalty, prudence, care, and full disclosure. A fiduciary duty is the highest standard of care recognized under American law. Investment advisors owe fiduciary duties to their clients. Brokers may owe fiduciary duties under certain circumstances.

Is My Broker or Advisor a Fiduciary?

A fiduciary is a person who has been placed in a position of trust and confidence. Investment advisors are fiduciaries. Stock brokers who manage discretionary accounts are also fiduciaries. Other financial industry professionals may also be considered fiduciaries depending upon the circumstances of the case. As fiduciaries, these types of advisors and brokers have a duty to act in their clients’ best interests.

Is your specific financial advisor a fiduciary? The short answer is, “It depends.” Whether your broker or financial advisor acts as a fiduciary depends primarily on:

• The type of advisor that they are; and
• The services they provide.

Most notably, RIAs and IARs are required to act as fiduciaries. This means that they are legally obligated to act with loyalty, honesty, prudence, and care, and in the best interest of their clients, prioritizing the client’s interests above their own. Some brokers are not fiduciaries. However, they are still subject to a stringent standard of care under the SEC’s Regulation Best Interest, which requires them to act in their clients’ best interests.

Investor Tip: Dual Registration is Common (You Should Confirm Your Advisor’s Duty)

Investors should be aware that many financial advisors are “dual registered.” In effect, this means that they sometimes act as a broker (often not a fiduciary) and sometimes as a IAR (a fiduciary). Always ask your advisor to clarify which role they are serving in any given situation.

What Constitutes a Breach of Fiduciary Duty?

A fiduciary breach occurs when a broker or advisor violates the trust and confidence that has been reposed in him or her by the client. This happens when brokers and advisors make unsuitable investment recommendations. It also happens when brokers and advisors make unauthorized trades, recommend over-priced products, or fail to pass on discounts to their clients. These are just a few examples of conduct that constitutes a breach of fiduciary duty.

Know the Elements of a Breach of Fiduciary Duty Claim

Are you considering bringing a breach of fiduciary claim against an RIA or a brokerage firm? If so, there are specific legal elements that you must be prepared to prove to impose liability. Here are the four general elements of a breach of fiduciary duty case:

• Existence of a Fiduciary Relationship: The first element involves proving that a fiduciary relationship actually existed between the investor and the advisor. Remember, not all financial professionals are fiduciaries. You must prove that your investment advisor owed you a fiduciary duty.
• Extent of the Duty Owed by the Fiduciary: Once a fiduciary relationship is established, the investor must show what specific duties were owed by the fiduciary. These duties typically include loyalty (acting without any conflict of interest), care (making decisions with due diligence and prudence), and full disclosure (providing all material information).
• Breach of Fiduciary Duty: The investor must demonstrate that the fiduciary breached their duties. This could be done by showing that the fiduciary’s specific acts or omissions were contrary to the investor’s best interests.
• Damages Caused by the Breach: Finally, the investor must prove that the breach of duty caused him harm or damages. This can involve out-of-pocket loss, loss of opportunity, or other negative financial impacts directly related to the breach. To maximize recovery in an investment fraud claim based on a breach of fiduciary duty, investors should be prepared to prove their damages with reliable evidence, typically in the form of an expert report.

What Compensation Can Investors Seek Through a Breach of Fiduciary Duty Claim?

A fiduciary financial advisor is responsible for providing reliable, high-quality, prudent investment guidance. When they fail to live up to their fiduciary duty, they can be held legally responsible for damages sustained by the investors. In other words, you have the right to bring a civil claim for breach of fiduciary duty in order to be made “whole.” Investors can seek compensation for the full extent of their investment losses that were caused by the breach of fiduciary duty. An experienced investment fraud attorney can help you determine the value of your case.

You May Still Bring a Claim Even if Your Advisor Was Not a Fiduciary

All investors should know that even if their advisor was not acting as a fiduciary, they may still have grounds to bring a claim if they failed to meet standard imposed by Regulation BI. If an advisor recommends products that are unsuitable for you, resulting in financial loss, you could potentially file a claim for damages. It is essential to review the recommendations provided by your advisor and assess whether they align with your stated financial goals and needs.

Why Trust Our Breach of Fiduciary Duty Investment Fraud Attorneys

A RIA can be held legally liable for a breach of fiduciary duty. As these are complex claims, it is imperative that investors are represented by an experienced, knowledgeable attorney. Practice Group Chair Daniel J. Broxup is a skilled securities arbitration and litigation lawyer with extensive experience handling breach of fiduciary duty cases. Our history of case results tells the story. Among other things, our breach of fiduciary duty lawyers are ready to:

• Hear what you have to say and answer questions about your breach of fiduciary duty case;
• Investigate your case—gathering the evidence to prove a breach of fiduciary duty;
• Advocate for you in any settlement negotiations with the defense; and
• Develop a comprehensive arbitration or litigation strategy focused on helping you secure justice and compensation.

How Can I Find Out if My Financial Advisor is a Fiduciary?

Ask them. To determine if your financial advisor is a fiduciary, the simplest method is to ask them directly. Financial advisors are required by law to disclose their fiduciary status when asked by a client.

Is an Undisclosed Conflict of Interest a Breach of Fiduciary Duty?

Yes. If your financial advisor owes you a fiduciary duty, they must disclose any potential conflicts of interest and, in turn, ensure that they are always acting in your best interests. RIAs are legally required to act in their clients’ best interests in every situation. They must disclose any potential conflicts of interest that might influence their advice or decisions. Failure to disclose such conflicts can lead to biased advice that may not align with the client’s interests.

Prove a Breach of Fiduciary Duty

Evidence is key to any claim against a financial advisor. A breach of fiduciary duty case is certainly no exception. Proving a breach of fiduciary duty involves collecting and presenting evidence that clearly shows the fiduciary failed to uphold their obligations. The evidence might include communications, financial statements, transaction records, and other documents that demonstrate a failure in duty, conflict of interest, or negligence.

Rules and Regulations for Financial Advisors

The obligations that a financial professional owes to their client depend on the nature of their relationship. Most notably, it depends on whether the advisor is a fiduciary or not. RIAs and IARs are fiduciaries. Brokers usually owe a slightly less comprehensive and rigorous standard of care, which is imposed under the SEC’s Regulation Best Interest.

Consult With an Attorney About a Breach of Fiduciary Duty

You can and should speak to an investor rights attorney if you believe that your financial advisor or brokerage firm breached their fiduciary duties. A lawyer with experience in securities law or FINRA regulations can assess the strength of your case and provide valuable guidance about what you need to do next to protect your rights and interests.

At Mika Meyers, PLC, our breach of fiduciary duty lawyers have the professional experience you can trust. If your broker or advisor has failed to act in your best interests, either intentionally or negligently, you may have a breach of fiduciary duty claim. We regularly handle these types of claims on behalf of investors. For a free consultation, call Daniel J. Broxup toll-free at (616) 632-8000 or contact us online. We represent investors in breach of fiduciary duty claims nationwide.