What Is a Broker Breach of Contract?
Your account agreement, the investment policy you signed, the allocation you were promised — these are commitments. When a firm disregards its own written terms and you lose money as a result, that is a breach you can bring a claim on.
Unlike suitability claims that focus on industry-wide standards, breach of contract claims focus on the specific promises your firm made to you. If the firm's own documents say your account will be managed conservatively and they loaded it with speculative positions, that internal inconsistency is powerful evidence.
Warning Signs
Allocation Drift
An allocation that drifted far from the strategy you agreed to in writing.
Instructions Ignored
Written instructions you gave that were never carried out by your broker.
Excess Fees
Fees charged beyond what the account agreement allowed or disclosed.
Ignored Restrictions
Account restrictions you requested — like no margin or no options — being ignored.
Common Breach Scenarios
- Violating investment policy statements (IPS): An agreed-upon asset allocation of 60/40 stocks-to-bonds that was actually managed as 90/10
- Ignoring account restrictions: Trading on margin in an account you explicitly designated as cash-only
- Exceeding fee schedules: Charging advisory fees or transaction costs beyond what was specified in the written agreement
- Failing to execute instructions: Not implementing stop-loss orders, transfer requests, or rebalancing instructions you provided in writing
Why Contract Claims Matter
Breach of contract claims have several practical advantages in FINRA arbitration:
- Clear, written evidence: The contract itself establishes what was promised, removing the "he said, she said" dynamic
- Lower burden of proof: You don't need to prove fraud or intent — just that the firm didn't do what it agreed to do
- Damages are straightforward: The difference between where your account is and where it would have been had the firm followed the agreement
Did your firm break its own promises?
We compare what was written in your agreement to what actually happened in your account. Free, confidential case review.
Request a Free Case Review Call 954-464-3739Frequently Asked Questions
The most important documents are your account agreement, any investment policy statement, account statements, and any written correspondence with your broker about your investment objectives or restrictions. We can help you obtain these if you don't have them.
Yes. It is common to assert multiple theories of liability in a single FINRA arbitration. Breach of contract, unsuitability, negligence, and breach of fiduciary duty are frequently pleaded together.
Nearly all brokerage account agreements contain mandatory FINRA arbitration clauses. This actually works in your favor — FINRA arbitration is typically faster and less expensive than court litigation.