Junior Jones Case

The broker, Junior suggested to Alex in April 2017 that he invest with the Senior‘s fund because the firm has a solid track record and the owner has had previous successes, but this would be a new and solid fund. Junior advised Alex that if he wishes to retire in the period of 5 years, he should invest one-half of his monies with Senior’s firm. Alex took junior advice and invested his monies to Senior’s fund. By December 2017, Alex lost a big portion of his retirement monies and now wants to sue Junior.

Alex should argue the Fiduciary rule to apply to his case because under the rule it states, brokers “have a duty of loyalty, trust, confidence and prudence in investing on behalf of their clients.” The broker is obligated to discuss with the

His action did not demonstrate loyalty, trust or care to Alex and his investment for failure to disclose the immediate relation. Under this rule, Junior had an obligation to disclose the conflict of interest and a failure to do so only demonstrates poor judgment and care. According to the Fiduciary standards, the advisors must act by putting their client’s interest above their own and have a duty of “loyalty and care.” Junior’s brother asked him to invest some of his client’s money into his fund, and can be argued that he placed his brother’s interest above his client only to build his brother’s clientele. This only shows Junior having an interior motive for suggesting senior firm to his client. Alex took Junior’s advice to invest in Senior’s firm, but if this information would have been disclosed before he decided to invest, this could have altered Alex decision. This breaks the loyalty and trust between the client and the broker for withholding important information and illustrates that Junior did not act diligently and prudence in this

Nevertheless, he also thought that if Alex wants to retire within the 5-year period, it would be best to extend the retirement date rather than invest in higher-risk securities. However, Junior suggested that Alex invest in a new company ran by his brother and withhold the conflict of interest information to only mention his brother’s prior success with another company. Under the Suitability rule, although it is not required for Junior to disclose the conflict of interest, Junior had an obligation as Alex broker to put his client's goal as a priority. Investing in a new company was a high-risk security and not a smart investment during this period where he is close to retirement. Junior needed to take more precaution regarding the period because he knew his client risk factor and his financial preference and should have suggested the best investment according to his client’s current