Failure to Supervise

Failure to supervise is often paired with another claim, such as unsuitable recommendations, unauthorized trading, or selling away. It is the reason a firm — not just an individual broker — can be responsible for your losses.

Brokerage firms are not just responsible for their own conduct — they are responsible for supervising their brokers. When a firm fails to properly oversee an advisor whose misconduct causes you losses, the firm itself can be held accountable.

The Firm Has Responsibility Too

Firms are required to have systems in place to catch and prevent broker misconduct. When those systems fail, or are ignored, the firm’s responsibility does not disappear just because the wrongdoing was carried out by one of its brokers.

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What Failure to Supervise Looks Like

Ignoring red flags in a broker’s trading or sales activity
Failing to act on customer complaints or disclosures
Allowing a broker to sell investments outside the firm (selling away)
Inadequate review of account activity, concentration, or suitability
Keeping a broker with a troubling history without proper oversight

Signs Supervision May Have Failed

Your broker’s misconduct continued unchecked for a long time
The firm had information that should have prompted action
Other investors were harmed by the same broker
Warning signs in your account were never addressed

How Failure-to-Supervise Claims Work

These claims are typically pursued through FINRA arbitration against the firm, usually alongside the underlying claim about what the broker did. Holding the firm accountable is often essential, especially when the individual broker cannot cover the losses. ChapmanAlbin handles the process for you.

ChapmanAlbin works on a contingency basis. There is no cost to speak with us, and in most cases you pay nothing unless we recover money for you.

What to Do If You Suspect a Supervision Failure

Act sooner rather than later, because time limits can apply. Gather your account records and note the broker and firm involved, and have an attorney review what the firm knew or should have known.

Frequently Asked Questions

My problem was with my broker, not the firm. Why involve the firm?

How do I know if the firm failed to supervise?

How long do I have to bring a claim?

How much does it cost to pursue a claim?

Do I have to go to court?

For more than 25 years, ChapmanAlbin has focused on representing investors — and only investors — in claims against brokers and financial firms, recovering in excess of $200 million for clients. Past results do not guarantee future outcomes.

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Disclaimer

This page is for informational purposes only and is not legal advice. Past outcomes are not a guarantee of future results. Each matter is different and depends on its specific facts.