Failure To Execute

Because your financial advisor, or even your broker, often has a fiduciary duty to you, they are required to act in accordance with several legal and ethical boundaries. One of the things your fiduciary is required to do is execute your order promptly, or within a reasonable time. While it can be rare for an order to essentially go ignored after being submitted, and there is no incentive for the broker to neglect orders, it can still happen. 

With many brokerages and other trading organizations operating with significant technical assistance, technology makes errors even less frequent, but still, they do happen occasionally. That said, when mistakes do happen and there has been a failure to execute an order, it can result in devastating losses. 

What Is a Failure to Execute?

A failure to execute is a type of breach of fiduciary duty that can be committed by brokers or financial advisors. It occurs when either a buy or sell order is submitted, received, but never acted on, or acted on too slowly. There are several ways that a failure to execute can create losses for the investor. 

If the broker fails to execute promptly, for example, the trade could fail to meet a specified optimum price. Failing to submit an order to sell could result in the loss of all gains previously achieved. Failing to close out a short position in the event of a rally could create devastating losses for the investor that submits the order. 

If the investor is able to show that the broker purposefully and willfully ignored the order or trade or caused an unnecessary delay of the transaction that resulted in losses for the investor, there may be a valid claim for punitive damages along with other types of compensation.

Common Reasons for A Failure to Execute

While there certainly are instances of brokers and advisors failing to execute an order, proving it can often be the most difficult task. This becomes even more challenging if the order was given to the broker verbally, over a phone call for instance, and wasn’t accompanied by formal written order. This is one of the reasons that having a paper trail for your investments and other transactions is crucial. The record of written buy and sell orders can act as their own record and can be more reliable than relying on recollections of verbal interactions. 

Sometimes, your broker may even disagree with your order, even officially advising you against a particular trade or transaction. In the end, however, once they have made sure the investor was aware of the risks and their objection, they still have a fiduciary duty to the customer to fill the order if they confirm it’s what they want. 

There are some situations where miscommunication or a misunderstanding between the customer and the advisor or broker may result in an order failing to be executed. An example of this would be the customer using unclear or indeterminate verbiage when confirming a trade verbally, and the broker failing to execute the order. There are other situations where an order failure or trade cancellation occurs, and the broker fails to inform you of the failure of a planned order or trade. 

There are plenty of situations, however, where the failure to execute was not based on a mistake or misunderstanding. Sometimes, a financial advisor or broker will simply refuse outright to make a particular trade. While in many cases this might constitute a breach of fiduciary duty, there are some specific legal protections for refusing certain opening orders, like a purchase or opening a short position. There are no such protections, however, for a broker refusing to execute an order to close an open short position, and they are prohibited from refusal. 

Sometimes, a broker will be forced to illegally fail to execute an order, often by someone close to the customer that acts on their behalf. In situations like this, while you may be dealing with interference from someone close to you, you may also still be able to recover compensation for losses that may have occurred as a direct result of the failure to execute.

Why Working with An Attorney Makes Your Claim Stronger

If you believe that your broker or financial advisor has illegally failed to execute one or more trades for you, the first thing you should do is contact an expert local securities and investor fraud attorney. Many people might feel intimidated by the thought of filing a claim for failure to execute, but with the help of an attorney, your claim can have significant advantages over a claim filed by someone without legal representation. 

The biggest benefit for your claim is going to be the overall guidance that your attorney will provide to you. You won’t have to wonder what kind of documents and evidence you’ll need, your attorney will tell you exactly what you’ll need, where to get it, and will provide legal assistance in obtaining those materials if needed. Your attorney will also be a priceless source of information and knowledge and will be ready to answer any questions you have about your claim, the process, or the latest updates to the case.

Additionally, your attorney will have a deep and thorough knowledge of the process for pursuing damages and compensation for claims resulting from investor fraud or breach of fiduciary duties. Firms like TorkLaw have decades of experience handling claims like yours successfully, and they have a strategy every step of the way.

If Your Broker Failed to Execute a Trade

If your broker failed to execute a trade and you suffered losses, you may be able to file a claim for compensation to recover those losses. The team at TorkLaw has the experience and knowledge you need to recover every bit of compensation you’re entitled to. Reach out today and speak with a securities fraud legal professional about your claim. You’ll be able to discuss the details of your case in a confidential environment, and if we take your case, you won’t need to pay anything unless you recover.