Negligence

Not every investor is harmed on purpose. Sometimes the damage comes from a broker or firm simply failing to do their job with the care you had every right to expect. That is negligence — and unlike fraud, it does not require anyone to have set out to hurt you.

Carelessness Still Causes Real Harm

You do not have to prove that anyone meant to hurt you. Financial professionals are expected to act with care and diligence, and when they fall short and you pay the price, they can be held responsible for what their carelessness caused.

What Investment Negligence Can Look Like

• Failing to supervise a broker whose misconduct caused losses
• Ignoring red flags or unusual activity the firm should have caught
• Failing to act on signs of fraud or financial exploitation
• Recommending investments without doing reasonable homework
• Neglecting to monitor or adjust an account as your circumstances change

Firms Have a Duty to Protect Investors, Especially Seniors

Brokerage firms are expected to watch for warning signs, and that is especially true with older customers. FINRA rules reflect this:

• Under FINRA Rule 4512, firms must make reasonable efforts to get a trusted contact person for an account.
• Under FINRA Rule 2165, a firm that reasonably suspects the financial exploitation of an older or vulnerable adult may place a temporary hold on a suspicious transaction or withdrawal.

When a firm ignores clear warning signs — a large, unusual transaction draining an elderly customer’s account, for example — and that customer is harmed, the firm’s failure to act can support a negligence claim.

Signs Negligence May Have Occurred

• Obvious warning signs in your account were never addressed
• The firm failed to step in when unusual activity should have raised concern
• Your broker’s misconduct went unchecked for a long time
• No one kept an eye on your account as your situation changed
• A large or unusual transaction went through without anyone reviewing it