Legal Question in Business Law in California

Re: Brokerage firm feduciary duty

This response assumes you reside in California and conducted your brokerage trades within the state. As a general rule, a licensed broker/dealer is charged with several different types of responsibilities with respect to its customers. One such responsibility is the "know your customer" rule. Your question implies you were deemed by your broker/dealer to be a sophisticated investor, since you were approved to buy stocks on margin. You might want to reexamine the processes used by that broker/dealer to initially qualify you for operating a margin account. If the broker/dealer did not follow appropriate guidelines for establishment of a margin account, you may have a right to argue some complicity in your losses on the part of the broker/dealer and possibly the broker assigned to your account. Your question does not indicate whether your stock trades were made at the encouragement of a stock broker. If your stock trades were at the suggestion of a broker, your account may have been subjected to excessive churning by this stock broker. Under this scenario, you may have an opportunity to recover some if not all of your losses. On the other hand, if you personally and independently selected what stocks to buy, hold or sell, then you may have a difficult time recouping any part of your losses from the broker/dealer or broker assigned to your account. Since you feel you have been subjected to unfair treatment by the broker/dealer, it is suggested you consult with a local securities attorney to determine your legal rights.

Re: Brokerage firm feduciary duty

They are under no duty to tell you that you are losing money on dumb trades that you yourself made. If you want to recuperate your losses, get a second job and work nights.