Breach of Contract

In the context of the Financial Industry Regulatory Authority (FINRA), a breach of contract occurs when a stockbroker or brokerage firm fails to uphold their obligations outlined in an agreement with an investor. These agreements can be written, verbal, or even implied through the actions of the parties involved.

Here's a breakdown of key points:

Breach can occur through various actions: This includes failing to follow the investor's instructions, neglecting to perform due diligence, or not fulfilling promises made in the agreement.

Breach can lead to consequences: If the breach results in financial losses for the investor, they may be entitled to compensation through FINRA arbitration. This is an alternative dispute resolution process specifically designed for securities-related issues.

Examples of breaches:

A broker makes unauthorized trades in an investor's account.

A brokerage firm fails to disclose important information about an investment.

A broker recommends unsuitable investments that do not align with the investor's risk tolerance.

It's important to note that determining a breach of contract can be complex and requires careful review of the specific agreement and the involved actions or inactions. If you suspect your broker or brokerage firm has breached your contract, it's crucial to consult with an attorney specializing in securities law to understand your rights and options.