Broker Negligence

Information may not be reliable

Broker negligence generally occurs when a broker fails to recommend “suitable” investments for the customer based on factors such as age, employment status, financial situation and needs, directives as well as investment objectives and risk tolerance level. A stockbroker has a legal duty to the investor to make investment decisions that are appropriate (or suitable) based on these factors.

Typically, in a “suitability” claim the broker will invest the customer’s assets in securities that are too aggressive for the customer, which in turn subjects the customer’s assets to inappropriate market risk. If the market moves against the investor who is exposed to this unsuitable risk, the losses can be devastating.