The broker is obligated to recommend trades which meet the needs of the customer, not merely to generate commissions for himself. Obligation of Disclosure . A broker also has a duty to disclose all material information in connection with an investment recommendation. In general, the broker has an obligation to disclose all information which may be reasonably relevant to an investor to take into consideration in making an informed investment decision. In particular, a broker has an obligation to disclose the various risks and level of risk of an investment recommendation.
Brokers have a duty to be truthful in all communications with customers.
Brokers are held to a standard that their communications should provide a sound basis for evaluating any securities being recommended. In particular, exaggerated, false or misleading statements are prohibited in a stockbroker's communications with the public. Authorization for Trading . A broker may not engage in unauthorized trading. On the other hand, a broker has an obligation to carry out the instructions of the customer.