Investors deal with risk on a daily basis, navigating unpredictable market changes and other factors as they seek to ensure the health of their portfolios. However, additional risks can come in the form of unscrupulous financial advisors, who harm these investments either through direct action or negligence. Even though most brokers truly have your best interests in mind, a savvy investor must remain vigilant of possible misconduct. The Financial Industry Regulatory Authority (FINRA) tracks the most common kinds of misconduct that investors should watch out for.

Breach Of Fiduciary Duty

By law, brokers must keep the interests of their clients first, investing ethically and responsibly, which involves a host of tasks. They must avoid conflicts of interest, disclose all relevant information about financial products, and maintain a high standard of care. Violating this fiduciary duty often encompasses a number of the categories mentioned below.

Unsuitable Investments

Certain investments are appropriate for some investors and not for others, and brokers have an obligation to know which is which. They must consider an investor’s age, experience, overall portfolio, financial position, objectives and other factors. If they don’t, a broker could recommend unsuitable investments.


Smart investing requires accurate information. If brokers tell outright falsehoods about a particular product -- or even give misleading truths -- they can be guilty of misrepresentation.

Omission Of Facts

This is related to misrepresentation, but in this case the broker simply withholds important details from the investor about a product or opportunity.


All brokers should do their jobs with a certain basic level of skill and attention to detail. If they don’t, they can be held liable for any damages which result.


This is one of the most egregious examples of broker misconduct, in which they forge signatures or even steal money outright. These scam artists often target vulnerable investors, such as retirees, but can strike anywhere.

Breach Of Contract

Beyond obeying the law, brokers are also bound by the contract you signed when hiring them. The terms of this agreement dictate what they can and cannot do, and if they don’t abide by these terms, you can recover damages for any resulting financial losses.

While this isn’t a complete list of all possible misconduct, it summarizes the most common types. If you’re working with a broker, you’ve placed a tremendous amount of trust in their judgment. You deserve as much protection in that relationship as you can possibly have.

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