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The purpose of this post is to provide the reader with a general discussion concerning the concept of breach of fiduciary duties and is not designed to be complete in all material respects. Thus, this post does not focus on the law of any particular jurisdiction or any specific set of facts. This information is being provided for educational purposes only and should not be considered or relied upon as legal advice.
Frequently, there is a substantial overlap of the underlying facts or the basis of a claim for negligence and for breach of fiduciary duties. For example, in De Kwlatkowski v. Bear Stearns & Co., Inc., 126 F.Supp.2d 672 (S.D.N.Y. 2000), the court acknowledged that, as it related to these two claims, there was some overlap among the relevant facts encompassed by the two theories of liability, and that to a large extent, they rested on the same actions and evidence.
In cases involving broker-dealer and customer, the duty of the agent (the broker) is inferred from his position. The extent of the duty depends upon the kind of work entrusted to him, his previous relations with the principal (the customer) and with all of the facts of the situation. Precisely how far is often blurry in broker-dealer cases because in many jurisdictions, the broker/client relationship may be said to be fiduciary in nature. These obligations may arise from and be defined by agreements between the client and the broker-dealer, by course of conduct or business dealings reflecting matters entrusted to or voluntarily assumed by the broker, or by laws, rules and regulations that specifically govern the relationship.
In general, the fiduciary duties identified with the broker/client relationship are designed to protect the customer from deception and unfair advantage and to promote professional skill and due diligence. As indicated in our discussion of negligence, these duties can vary based upon the factual nature of the relationship that you have with the firm and its broker.
Because breach of a fiduciary duty is an intentional tort, it requires an element of deceitful intent or recklessness ordinarily associated with more aggregated conduct. Consequently, the scope of fiduciary liability is narrowed to acts more directly targeted to or affecting the customer or his account.
Clearly, the factual basis of the relationship is critical to establishing a claim for breach of fiduciary duties. Whether or not the factual relationship that exists between you, the customer and the brokerage firm creates specific fiduciary duties and what these duties are, whether or not that duty was violated and what the damages relating thereto consist of are matters that must be explored, presented and qualified by experienced legal counsel in order to enhance your chances of success.
Outside of the area of disputes between broker-dealer and customer, claims for breach of fiduciary duties arise in all walks of life. All who assent to act on behalf of another person and subject to that person’s control are common law agents and are subject to general fiduciary principles that are applicable to all employees.
For example, in the field of corporate employment, it has been established that employees owe an undivided and unselfish loyalty to the corporation.
Another example is thatthe caretakers of the elderly are fiduciaries of their employers and must always act with the utmost loyalty to them.Contact Us
With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.