Failure to Follow Directions

As a general rule, a broker is obligated to obey the customer’s directions regarding all aspects of an investment account. Even if the investor has a discretionary account, in which the investor has given the broker authority to trade without obtaining the investor’s approval beforehand, this duty still applies. However, if a broker has reason to believe that a customer is incompetent or that following a customer’s directions would represent a significant departure from the client’s investment objectives, risk tolerance and best interests, then the broker should proceed with due caution and, under certain circumstances, is required to decline to follow the customer’s directions.

Examples of failure to follow directions include, but are not limited to:

  • Failure to purchase or sell a security as directed by the customer, and
  • Failure to implement an investment strategy as directed by the customers (such as continuing to use margin after being directed to stop).

Where a wrongful failure to follow directions results in a loss, the customer may be entitled to recover that loss from the broker.

If you have investment losses or problems involving failure to follow directions, call the lawyers at Page Perry for experienced representation at (770) 673-0047 or (877) 673-0047 (toll free).