Brokerage firms and other financial institutions are required to implement procedures to monitor individual brokers and maintain compliance with securities laws and regulations. These procedures typically include:
- Intermittent monitoring of trades being performed.
- Reporting on accounts that exceed a predetermined amount of trades each month.
- Reporting on accounts that exceed a certain amount of commission in relationship to equity.
When a broker makes transactions without the knowledge of his or her managers, it becomes a serious risk for investors. Securities laws require a certain level of supervision of brokers and dealers by their management. These procedures ensure that investors’ money is not being squandered or inappropriately invested.
Securities Laws Gives Investors Rights
Plain and simple, you shouldn’t have to blindly trust that your broker is handling your investments in an upfront, responsible manner. What you may not realize is that securities laws are in place to ensure that:
- Your broker follows all appropriate laws.
- Your investments are protected.
- Your funds are not misappropriated.
Securities laws hold broker-dealers accountable for failure to supervise their brokers. That said, if your broker fails to meet the above criteria, he may be violating the law and the brokerage firm may be held accountable for lack of supervision.
Victim of a Lack of Supervision?
Contact one of our securities lawyers for a free and confidential consultation.