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Breach of fiduciary duty legal complaints need 4 primary elements

On Behalf of | Jun 2, 2020 | FINRA |

People or organizations in Pennsylvania that are considering legal action against fiduciaries will need to address four issues within their lawsuits. Cases with evidence that appears to fulfill the necessary elements of a fiduciary breach of duty claim for damages may have sufficient weight to hold accountable someone in a fiduciary position.

A documented fiduciary duty must be present for a principal to allege a breach of duty against a fiduciary. The actual breach, or failure to act dutifully, forms the second consideration. Common breaches of fiduciary duty are using money unlawfully, misinforming a principal, having conflicts of interest or outright negligence. The breach must result in damages for the principal to satisfy the third element. The fourth pillar of a legal complaint arises from causation. This means that damages happened as a direct result of the breach of duty.

Breach of fiduciary complaints that ascend to the level of filing a complaint might result in a financial settlement for the plaintiff. A successful action may also cause reputational damage to fiduciaries in the form of lost credentialing or employment.

Problems with fiduciaries may come about in a variety of situations. The trustee might breach the fiduciary duty to a beneficiary by making financial decisions that are not in the best interest of the beneficiary. Disputes about the appropriateness of financial decisions can happen between shareholders and upper management or investors and fund managers.

A person with questions about the conduct of a financial adviser and broker-dealer may gain clarity about applicable laws by consulting an attorney. If the facts indicate that a legal complaint about the fiduciary would be advisable, an attorney might prepare a complaint to the Financial Industry Regulatory Authority or FINRA.


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