Failure to Supervise

A brokerage firm is directly responsible for its registered representatives. Firms have a legal duty to monitor and supervise their brokers to ensure compliance with regulations of the security industry and the securities laws. If brokers violate laws or act in negligence and the client suffers damages as a result, the firm may be responsible for failure to supervise its representatives, resulting in recovery of losses for investors.

A variety of scenarios would be considered grounds for a failure to supervise claim. A few examples include instances when a brokerage firm failed to:

• train the broker adequately
• give the broker accurate information
• license the broker properly
• review investor account
• review statements for possible problems (including breach of fiduciary duty, churning, and unsuitable investments)
• perform due diligence

As is evident in these few examples, a broker does not have to be at fault for a firm to be held liable. For example, arbitrators may find that a firm failed properly to train your broker, and you could then recover losses from the brokerage firm.

At Goodman & Nekvasil we have spent decades recovering losses through securities arbitration, including complex matters such as failure to supervise claims. Particularly when you have already suffered significant damages, it is important to receive professional legal help when attempting to recover losses. Contact us now for a free consultation and explore how our legal team may be able to help.