In general, stockbrokers and financial advisors are deemed to have "fiduciary" duties to their customers. This means that the financial consultant or stockbroker must act in the best interest of his or her customer. The brokerage firms working for Metropolitan and Summit were required by state law, federal law, and by rules of various self-regulatory organizations to ensure that when they recommended securities to their customers, they only recommended those which are suitable for their customers' particular needs. For example, the National Association of Securities Dealers' "suitability rule" states that when a broker recommends to a customer the purchase of a security, he or she must have reasonable grounds for believing that the recommendation (or purchase) is suitable for the customer in the context of the customer's financial situation and needs, and the customer's other security holdings.

In some cases, investors in Metropolitan and Summit have already begun direct proceedings against their brokers, trustees, or financial advisors alleging violations of these rules.

« Previous