To help you identify when a stockbroker/financial advisor has breached his or her fiduciary duty, take a look at the New York Stock Exchange publication, “Content Outline for the General Securities Registered Representative Examination (Test Series 7)”.
The unsuitability doctrine is based on the New York Stock Exchange’s Know Your Customer Rule and the Financial Industry Regulatory Authority’s (FINRA) Rules of Fair Practice.
Churning, in its most basic form, occurs when a stockbroker/financial advisor buys and sells securities for your account, without regard for your investment interests, for the purpose of generating commissions.
The ISDA (International Swaps and Derivatives Association) Master Agreement is typically used between a derivatives dealer and their counterparty in connection with a derivatives trade.
By law, stockbrokers and certain sales assistants must be registered with FINRA and with state regulators. If they fail to meet this requirement, you may have the right to rescind a purchase or sale.
When you (through your financial advisor) purchase securities that are unregistered and an exemption for registration does not exist, you may be able to rescind, or reverse, the purchase.
Unauthorized trading occurs when the stockbroker/financial advisor fails to obtain your permission to purchase or sell a security. When an unauthorized purchase or sale has occurred, it is important to complain immediately!
When you have an oral or written contract with your advisor or stockbroker, and that person breaches their contractual obligations, they may be financially responsible for the breach.
As a fundamental element of their relationship with you, stockbrokers/financial advisors, as well as registered sales assistants, are required to follow your instructions. They may be liable if they fail to do so.
