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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

Beware of the Rogue Stockbroker

Posted in Broker-Dealer Regulation, Law Firms and Lawyers, Registered Representatives, Securities Litigation

We take a step back and speak directly to attorneys for a change, in particular, those lawyers who may recommend stockbrokers to their clients. 

In New York, attorneys are subject to the tort of negligent referral if they were to refer such a stockbroker, who then causes damage to the client.  Consequently, prior to making any such recommendation, attorneys should consider reviewing a stockbroker’s record prior to recommending such a person to their clientele.  FINRA’s BrokerCheck provides a great resource for attorneys.  Essentially, the lawyer should engage in some due diligence as an initial step.  Another potential safety mechanism for lawyers would be to recommend more than one stockbroker when making these referrals.   

Thus, attorneys must be very careful and review all available public information before making these recommendations.