Has Your Financial Advisor Committed A Breach Of Fiduciary Duty?

When you hand over your hard-earned savings to a financial professional, you aren’t just buying a service – you are placing your financial future in their hands. This unique relationship requires an exceptional level of trust. Because of this imbalance of power and information, the law imposes a strict legal obligation on certain financial professionals: a fiduciary duty.

A breach of fiduciary duty occurs when a financial advisor violates this trust, placing their own financial interests, commissions or corporate incentives ahead of your financial well-being. If your portfolio has suffered severe, unexpected losses, it may not be a normal market downturn. It could be the result of a legal breach.

LewinsLaw, P.C., helps investors strip away the jargon of finance to identify where advisors violated their duties. Led by Richard A. Lewins – a former Wall Street financial advisor turned investor advocate – the firm aggressively pursues the recovery of investment losses nationwide from their primary office in Dallas, Texas.

What Does “Fiduciary Duty” Mean In The Investment Industry?

In the financial sector, a fiduciary duty is the highest standard of care recognized by law. It requires an investment professional to act with absolute loyalty, utmost good faith and total transparency toward their client.

A fiduciary relationship goes far beyond basic customer service. Legally, a fiduciary must always place the client’s interests completely ahead of their own or their firm’s.

The Core Elements Of Fiduciary Responsibility

To establish a successful recovery claim, an investor must understand the specific components that make up this legal obligation:

• The duty of care: The advisor must utilize their specialized knowledge, deep industry training and prudent judgment to manage your assets wisely. Negligence, laziness or a failure to research an asset before recommending it constitutes a direct violation.
• The duty of full disclosure: A fiduciary must proactively disclose all material facts regarding an investment. This includes clearly explaining the risks, overhead costs and any underlying conflicts of interest (such as a financial relationship between the advisor’s firm and the product sponsor).
• The duty of loyalty: The advisor must act solely in your best interest. They are strictly prohibited from engaging in self-dealing or recommending an investment simply because it pays them a higher backend commission or bonus.

If your financial advisor has violated any of these elements of responsibility, a consultation with a securities fraud attorney can help you determine your next steps.

Which Investment Professionals Must Provide You A Fiduciary Duty?

One of the most complex issues for lay investors is understanding who actually owes them a fiduciary duty. The answer historically depended on how the professional was registered, but modern regulations have narrowed the gap to protect retail investors.

Registered Investment Advisors (RIAs)

Investment advisors are governed by the Investment Advisers Act of 1940. Under federal law, RIAs have an ongoing, continuous fiduciary duty to their clients. This applies to both discretionary and nondiscretionary accounts.

Stockbrokers And Broker-Dealers (Regulation Best Interest)

Historically, traditional stockbrokers were held to a lower “suitability” standard. However, under the Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI), broker-dealers and their associated persons are held to an enhanced standard. When making a recommendation to a retail customer, a financial advisor must act in the retail customer’s best interest at the time the recommendation is made and cannot place their financial interest ahead of yours.

Common Examples Of Fiduciary Breaches

Fiduciary breaches rarely look like overt theft. Instead, they are often buried inside complex trade confirmations and layered products. Common violations include:

• Inappropriate recommendations and unsuitability: Recommending complex, illiquid investments – such as nontraded real estate investment trusts (REITs), private placements or high-fee variable annuities – that do not align with an investor’s age, risk tolerance or retirement timeline.
• Omissions and misrepresentations: Failing to mention high exit fees, hidden risks or underlying structural weaknesses of a product to secure an investor’s signature.
• Account churning: Executing excessive buying and selling within a portfolio primarily to generate high transaction fees or commissions for the financial advisor, eroding the investor’s principal.
• Failure to diversify (overconcentration): Concentrating an investor’s assets heavily into a single stock, sector or volatile asset class, exposing the portfolio to catastrophic, unnecessary risk.

In cases of fiduciary breaches, trust your gut. If it doesn’t look right or sound right, it’s worth asking an experienced securities law attorney to review the data to make a recommendation.

Why Hire An Insider To Fight For Your Recovery?

Securities arbitration and litigation are highly specialized. Brokerage firms retain elite defense teams who will argue that your financial losses were simply the result of “market volatility” rather than advisor misconduct.

Founded in May 2009, LewinsLaw, P.C., focuses exclusively on investor protection. Mr. Lewins is a dedicated financial advisor misconduct attorney who was admitted to the Texas bar in 1995. Before entering the legal profession, he spent years working as a financial advisor and branch manager for investing giants such as EF Hutton, Merrill Lynch and Shearson Lehman. This background allows him to see through defense tactics, dismantle complex account statements and identify hidden compliance failures that more general practitioners could miss.

Answers To Frequently Asked Questions About Fiduciary Breaches

Mr. Lewins knows you are upset and need accurate, plain-language answers to your legal questions after a breach of fiduciary duty. Here are answers to several of the questions he hears most frequently in his office.

My financial advisor claims they aren’t a fiduciary. Do I still have a case?

Yes. Even if your professional claims they are a transaction-based financial advisor rather than a financial planner, they are still strictly bound by the SEC’s Reg BI when making recommendations to retail investors. Failing to put your interests first when making recommendations still gives you strong grounds to seek recovery.

What kind of compensation can I recover?

In a successful breach of fiduciary duty claim, an investor may be eligible to recover out-of-pocket losses, the return of excessive fees or commissions kept by the financial advisor and, in certain cases, well-managed portfolio damages (the market gains your account reasonably should have achieved if it had been managed properly).

Schedule A Confidential Legal Consultation Today

Take control of your financial recovery. Talk to Mr. Lewins by calling his office in Dallas at 972-893-9245 or fill out the online contact form to schedule your confidential consultation.