Failure to Execute Trades & Orders Leading to Investment Loss

There is little incentive for a broker not to place an order. However, innumerable trades occur daily and mishaps are frequent, including failures to place orders. Sometimes requests for purchases or sales of securities go missing. If such a thing happens, a financial advisor and his broker dealer may be negligent or worse. In those instances, an investor may seek redress.

There are situations in which an investor wishes to liquidate a particular security but the financial advisor sees this differently. If an investor places a firm order to liquidate, and that order is not complied with, then a wrong has occurred. If your financial advisor convinces you to not sell and you acquiesce, usually such in not actionable. HOWEVER, RECOMMENDATIONS TO HOLD ARE ACTIONABLE AND as they are part of the general suitability of your portfolio. The case is stronger if you can establish a motive for the advisor and firms' actions.

If the broker or firm refuses to place an order the client may have a valid complaint. If the order is an “opening” order – a purchase order or short sale – the broker or firm can refuse to take the order (except under certain circumstances). However, if the order is a “closing” order – liquidating a position or covering a short position – the broker or firm should not refuse the order.

Of course, the failure to place the order must result in damages. Example: The broker does not sell and the price drops. In any event, execution failures should be addressed as soon as possible in order to recover losses.

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