Fiduciary Duty is the highest duty under the law, typically referred to as the duty to “fall on the sword.” The fiduciary must put the interests of his client ahead of his own, monetarily speaking. A fiduciary duty involves a relationship of trust and confidence, and may be formal or informal. Good faith is required, and among other things, it compels reasonable care.
A broker and her firm have a fiduciary duty of best execution to not place their own interests ahead of the client’s, and to execute the order at the best price available in the marketplace. If a broker agrees to manage her client’s investments and has discretionary authority to make decisions, the broker and his employer probably have a fiduciary duty to that client.
A breach of fiduciary duty is viewed similarly to fraud in most jurisdictions and is accorded greater rights of recovery than simple negligence.
