Failure to Supervise

Securities Law Attorney Assisting Investors in Los Angeles and Beyond

We trust brokerage firms and their staff to follow the law, treat us right, and execute our financial plans with accuracy and effectiveness. In most cases, we do not meet everyone who works at a brokerage firm, instead trusting that the brokers whom we do meet have hired competent and capable staff that will facilitate their operations. Unfortunately, in some situations, brokerage firms fail to adequately supervise their staff members. This may result from a variety of situations, such as being too busy, being careless, or not using enough care during the hiring process. No matter the excuse, a brokerage firm that fails to appropriately supervise its staff and that causes an investor to incur financial losses as a result may be liable to the investor for damages. Los Angeles securities law lawyer Steve A. Buchwalter has assisted many residents of Southern California with bringing claims against brokers and brokerage firms.

Take Legal Action Against a Brokerage Firm for a Failure to Supervise its Employees

Since brokers have an extensive amount of specialized knowledge about finance and investing, compared to the average investor, they owe their clients the highest fiduciary duty in advising and counseling them and managing their money. A fiduciary is similar to a trustee in that he or she needs to act diligently and faithfully in all aspects regarding the client’s business affairs. A fiduciary must act in the principal's best interest while upholding a duty of loyalty and approach each aspect of the client relationship with good faith, fair dealing, and integrity. In short, brokers have a duty to not abuse their clients’ trust and confidence.

If a brokerage firm fails to adequately supervise its employees, including individual brokers, risks arise that certain individuals may not follow applicable rules and regulations and uphold their individual fiduciary duties. Brokerage firms must maintain a diligent policy of supervision and be able to show that they have complied with the standards, procedures and rules that govern the securities industry. If a broker at a firm engages in negligent or deceitful conduct, an investor who suffers financial harm as a result may be able to hold the brokerage firm liable for the broker’s conduct through a legal theory known as vicarious liability. This theory provides that an employer is liable for the negligent acts of its employees that are carried out in the course and scope of their employment duties. The brokerage firm also may be directly liable under the theory that it acted carelessly in failing to properly supervise the employee whose carelessness or misconduct caused the investor’s losses.

After establishing that he or she has suffered a financial loss resulting from a firm’s failure to properly supervise its employees, the investor is entitled to receive compensation for the difference between the actual value of his or her accounts and the estimated value of his or her accounts had the failure to supervise not occurred.

Consult a Dedicated Securities Law Lawyer in the Los Angeles Area

At the Law Offices of Steve A. Buchwalter, you can seek guidance from a broker fraud attorney who has assisted numerous Southern California investors with recovering funds from brokerage firms that failed to adequately oversee their staff. We can represent clients in Beverly Hills, Pasadena, Santa Barbara, Irvine, and Newport Beach, among other cities throughout Los Angeles, Ventura, and Orange Counties. We provide a free consultation to discuss your situation and how we may be able to assist you. Call us at (818) 501-8987 or contact us online to set up an appointment with a Los Angeles securities law attorney.