Customer Claims Against Brokerage Firms and Individual Brokers, Illinois Securities Lawyer

QUESTION

What is a breach of fiduciary duty claim?

ANSWER

It has been said that all agents owe their principals a fiduciary duty of complete fidelity, loyalty, obedience, and trust. The courts in each jurisdiction differ about when a fiduciary duty arises in a customer-broker relationship. Some jurisdictions hold that unless the customer has given his broker discretionary powers over his account, the broker does not owe the customer a fiduciary duty. Other jurisdictions find a fiduciary duty in all customer-broker relationships, but limit the broker's duties to those he specifically agreed to perform. For instance, in a typical non-discretionary account, the fiduciary duty would be limited to the execution of the customer's orders and accounting for the customer's funds. Other jurisdictions examine the facts of each situation closely to determine whether the customer reposed sufficient trust and confidence in find a fiduciary duty. A fiduciary duty is sometimes found when there is a great disparity in the expertise of the parties and the broker has been able to exert substantial influence over the customer due to his superiorposition. When a jurisdiction has found that a fiduciary duty exists, the customer does not have to prove that his broker intended to breach the duties he owed to him. Negligence will suffice.

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