Case Study – Registered Representative

June 9, 2010


As a Registered Representative, you recommend, buy and sell securities for your clients. They look to you to be their expert guide, but may not always clearly listen to your warnings of the risks of volatility of certain investments. Your clients might not even understand that there is no absolute guarantee of making a profit with any investment. That is why you need professional liability insurance to protect you in your fast paced world.

ProSurance Group understands your insurance needs, and will provide the personalized service you deserve. We will discuss with your insurance agent or you directly what type of coverage you require and how to best design a policy that offers you maximum protection at a reasonable cost. If you also sell life insurance and annuities, or provide financial planning or investment advisory services, we can also insure these activities.

“The registered representative was ordered to pay $2 million in restitution and court fees”

Even the most careful and experienced Registered Representative can innocently become involved in a professional liability claim.


A Registered Representative had a successful relationship with his client for several years. He had recommended a growth and income strategy for his client’s funds that had produced moderate, if unspectactular returns. However, his client realized that his portfolio was lagging the market and was interested in making more money. At the client’s request, he began recommending purchasing more aggressive stocks on margin.

As the bubble in high tech stocks burst, his cilents lost all of his invested funds. Even though he requested and authorized a change in investment strategy, the client sued his registered representative for recommending unsuitable securities and for failing to disclose the risks, potential volatility, and effect of margin. The registered representative was ordered to pay $2 million in restitution and court fees.


Leave a Reply

You must be logged in to post a comment.

Why ProSurance Group Inc.

Prosurance Group, Inc. is an organization experienced in protecting Financial Service Professionals.

We'll help you through:
  • Innovative policy terms
  • Flexible underwriting
  • Competitive financing
  • Sound financial backing
  • Responsive claims service
No One Expects To Be Sued
But as a financial professional, you and your firm could be. Clients rely on your knowledge and expertise to help them and you may be liable for any mistakes you might make. No matter how carefully you perform your job, your daily activities can put your career and financial existence at risk. At any moment, in any situation, an unhappy client can bring a complaint against you.