Chicago, IL asked in Stockbroker Fraud for Illinois

Q: I've heard the rules are changing in protecting

me against bad investments and what a broker has to tell me - is that true?

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1 Lawyer Answer
Alex Schmidt
Alex Schmidt
  • Criminal Law Lawyer
  • Cranford, NJ

A: There are rules in place protecting you against bad or unsuitable investments. FINRA suitability rules for instance require that any investment recommendation made by a broker to an investor must be in line with investors stated financial profile and objectives. What I think you might be referencing in terms of a rule change or what a broker has to tell you is the Department of Labor (DOL) Fiduciary Rule which was recently overturned by a Federal Court and is no longer being pushed by the Trump Administration. The DOL Fiduciary Rule may no longer be in place at the federal level but this doesn't necessarily limit what disclosers your broker has to make to you. Much will depend on where you are investing and if the firm has internal regulations still in place requiring certain disclosures to be made such as fees on certain products or material market events concerning securities in your account. Where you live and state securities regulations are also an important consideration. Whether you have a discretionary investment account or a commission based account is of great importance as well. Bottom line is what your broker has a duty to divulge is a fact sensitive inquiry. Much will depend on your investment profile and relationship with your broker or investment advisor in determining what has to be disclosed.

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