Brokerage House Conflicts

Unless you started your investments last Tuesday, you may recall when Solomon Smith Barney was purchased by Travelers and then resold to Citibank to become Smith Barney. Smith Barney began to function under Citibank and the Citibank program began to look like a supermarket for financial products. Situations like that illustrate most clearly when a brokerage house conflicts with a stockbroker’s duty to his investors. It is almost untenable sometimes for a stockbroker who works for a major stock brokerage firm to ignore the daily calls for promoting certain investment vehicles and discouraging others. This is both the ‘ying and the ‘yang, good and bad, of having a financial advisor who works in a major firm.

House conflicts arise below the radar but are a constant theme in claims of broker bad dealings, broker fraud, stockbroker abuses, unsuitable investments or excessive risk tolerance failures. In the constant ebb and flow of financial markets, brokers must deal with both the needs of their individual clients and the platforms from which they service them. Even though your individual financial advisor may be your life's hero he serves as an army of stockbrokers who march to the beat of a drum not of your liking. This conflict is often at the heart of most arbitration claims for stockbroker fraud, stockbroker abuses, and stockbroker failures. The stock brokerage firm may itself be in the midst of financial dealings which can cause them to neglect the needs of individual investors. This is a conflict. Your individual stockbroker may be servicing accounts of such magnitude that the activities of their other clients may set up an inherent and internal conflict within that stockbroker’s practice. You cannot possibly know, nor will you ever know unless you arbitrate and litigate, what voices are being heard and what masters are being served on a day-to-day basis both at the desk of your stockbroker, and at the trading desk of the brokerage house. Suitability and risk adverse situations compound these problems for retirees and low risk tolerance investors.

All the major stock brokerage houses with retail offices in South Florida, Boca Raton, Fort Lauderdale, and the Palm beaches exist in environments of inherent conflict. You cannot possibly know when a brokerage firm headquartered in New York is undertaking a major investment that will conflict with the investments you are undertaking through your investment advisor. Knowing this should encourage you to ask the question of whether a loss in your trading account may in fact be a viable claim against your stockbroker.

If you suffer losses in your portfolio based on improper investments, lack of diligence, fraud or inherent conflict, contact a stockbroker fraud attorney in your area. South Florida, Boca Raton, Fort Lauderdale and West Palm Beach have a great many practitioners whose specialty in this area extends well beyond South Florida. Just as a stockbrokers’ house will invest in financial vehicles in other markets you may be undertaking an investment which is doomed due to an unknown and inherent conflict in the back office.