Under regulations of the Financial Industry Regulatory Authority (FINRA) and other Federal securities laws, brokerage firms are responsible for supervising and avoiding negligent behavior on behalf of their brokers. This level of supervision is in place to ensure that broker-dealer relationships ensure compliance with FINRA regulations.
The SEC has stated that the “responsibility of broker-dealers to supervise their employees by means of effective, established procedures is a critical component in the federal investor protection scheme regulating the securities.” To ensure that brokers do not place their personal interests ahead of their clients’, these regulations require broker-dealer supervision promoting compliance with necessary regulations.
As an investor, if you are the victim of broker fraud, you may have a claim against their employer due to failure to properly supervise. According to Section 15(b)(4)(E) of the Securities and Exchange Act of 1934, broker-dealers must properly supervise to avoid violations of securities laws.
If you, or somebody you know has lost money in an investment due to broker misconduct, please contact the securities attorneys at Ludin Law to learn how we can help you recover you investment.