Skip to main content

Exit WCAG Theme

Switch to Non-ADA Website

Accessibility Options

Select Text Sizes

Select Text Color

Website Accessibility Information Close Options
Close Menu
Carlson Law, P.A. Motto
  • Free Consultation
  • ~

Failure to Supervise

Brokerage firms, wealth management firms, and investment advisory firms have a duty to supervise their financial advisors in order to prevent customers from harm. When a firm fails to adequately supervise an employee and a customer is damaged as a result, the firm can be held liable for the losses.

The Financial Industry Regulatory Authority (FINRA) regulates all securities brokerage firms in the United States, and has its own set of rules that the firms must abide by. FINRA Rule 3110(a) mandates that firms have supervisory systems for the activities of their financial advisors that are “reasonably designed” to “achieve compliance” with FINRA rules and securities regulations. It also outlines the minimum requirements for a firm’s supervisory system.

FINRA Rule 3110(b)(4), entitled “Review of Correspondence and Internal Communications,” requires a firm to have supervisory procedures in place to review incoming and outgoing correspondence and internal communications. In other words, firms must monitor their advisors’ incoming and outgoing emails.

The FINRA supervision rules require brokerage firms to create thorough supervisory systems and document their supervision efforts. Under the negligent supervision legal theory, the focus of the analysis is typically whether or not the firm has reasonable supervision controls in place and, more importantly, whether the firm actually implements the policies and procedures.

Please contact us for a free and confidential case evaluation if you believe that you are a victim of a firm failing to supervise its financial advisor.

Share This Page:
Facebook Twitter LinkedIn

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

Latest Blog Posts

Franklin BSP Realty Trust/Benefit Street Partners Realty Trust Losses

On October 18th, 2021, the non-traded, publicly registered real estate investment trust (REIT) Franklin BSP Realty Trust completed its merger with the publicly traded REIT Capstead Mortgage Corporation. At the...

Read More

Sierra Income: Was Non-Traded BDC Investment Too Risky?

In March 2022 Sierra Income Corp., previously a non-traded business development company (BDC), marked the completion of its merger with Barings BDC Inc., a publicly traded BDC. The successful merger...

Read More

Hospitality Investors Trust Bankruptcy: Investors May Have Options

Hospitality Investors Trust is a publicly registered, non-traded real estate investment trust whose initial offering became effective in 2014 and which declared bankruptcy in 2021. According to the REIT’s website,...

Read More

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

Skip footer and go back to main navigation