When you enlist financial professionals to manage your investments, you rely on every level of that company — from your individual broker to the firm they work for — to uphold their responsibilities. However, if your broker is negligent when managing your investments, the firm might also have failed in their duty to you. What is failure to supervise and how might it impact your investments?
What is a firm’s duty to you as a client?
The Financial Industry Regulatory Authority (FINRA) outlines a number of rules about a firm’s responsibility to supervise their brokers. Not only are firms required to oversee the individuals acting on behalf of their business, they also must outline a clear plan for that supervision and regularly review that plan.
If a firm does not properly supervise its brokers, it can allow a broker’s negligence or self-serving actions to go unnoticed. A lack of supervision could, as a result, let that negligent behavior continue for a longer period of time and do more significant harm to your finances.
Can you hold a firm responsible for failure to supervise its brokers?
Because of the damage that a broker’s fraudulent or negligent behavior can do to your financial health, a firm’s failure to supervise its brokers is a very serious matter. Thankfully, legal options are available that can help you hold both the broker and their firm responsible. A legal claim could help you recover the funds lost due to the firm’s failure to supervise its brokers.