Best Execution Failure by Two Brokers Results in SEC Bar

Their press release
dated October 28, 2015 the SEC disclosed the bar of two brokers involved with favoring certain customers
in certain securities purchase transactions while also garnering extra commissions for their firm in the
process. As indicated in the SEC’s Administrative Decision in Administrative Proceeding File Number
3-16930, the duty of best execution “requires a broker – dealer to seek to obtain the most favorable
terms reasonably available under the circumstances for a customer’s transaction.”

The decision went on to indicate that “as part of this duty, a broker – dealer must conduct a regular and
regulatory review of its practices in light of market and technology changes, and may need to assess
which competing markets, market makers, or electronic communications networks offer the most favorable
terms for customers’ orders.”

Other factors to consider in the best execution obligation includes the following factors:

  • The price of a security
  • Account order size
  • Trading characteristics of the security
  • Speed of execution
  • Clearing costs
  • The cost and difficulty of executing an order in a particular market

Notwithstanding all of the technological advancements in the securities markets over the past ten years,
many brokers continue to fail to meet their obligation of best execution to investing customers.

We offer a free initial consultation to investors who feel they may have been victimized by failure
of their broker dealer to meet their best execution requirement for securities purchases and sale
transactions. For a free initial consultation, contact the Law Offices of Timothy J. O’Connor at
(518) 426-7700.

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