At all times, a broker is obligated to obey the instructions that the investor gives him 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.

If the investor instructed the broker to buy or sell a stock or mutual fund and the broker failed to do so in a timely fashion, or told the investor he would execute the trade, but did not, he is liable for not following directions. This is especially true if there is an increase or decrease in the price of the security the investor wanted to buy or sell. The investor may recover damages for not realizing a gain or by incurring a loss resulting from the broker’s negligence.

Another example of this type of broker misconduct occurs when the broker resists the investor’s instructions to sell a particular stock. Rather than doing what the investor asked, the broker may -- solely for his or the firm's own benefit -- pressure the investor to keep the security. By improperly persuading the investor to change instructions, the broker may be liable for any losses the investor suffers as a result of retaining the stock.

A broker who resists instructions to stop using margin in an account may also be liable for damages, particularly if the portfolio declines in value because of the continued margin trading. The broker must likewise put into practice any investment or trading strategy the investor instructs him to implement. In other words, if the investor instructs the broker to buy only triple-A rated municipal bonds or government bonds paying a certain interest rate, he must not disregard the investor’s directions and buy something else.