Failure to Supervise

A brokerage firm, or supervising broker, has the duty to supervise stockbrokers with extensive disciplinary histories. Firms and stockbrokers also have a duty to report every written complaint made against them. In addition, the firms must execute transactions and follow other supervisory procedures in a manner which complies with the industry’s regulations. furthermore, a brokerage firm generally has an obligation to supervise the securities business conducted by a stockbroker outside of a firm. Hence, a brokerage firm may be held liable for any misconduct associated with investments that a stockbroker sells or solicits outside of the firm ("selling away").