In business, the stakes are sometimes very high. An individual may have invested their life savings into a project, and placed their trust in numerous business partners.
If you are placed in such a position of trust, then you owe a fiduciary duty to your clients or others for which you are acting as a agent. Essentially, this means that you must act in their best interests. Unfortunately, those on whose behalf you are acting may accuse you of wrongdoing, no matter what you do. Being accused of breaching a fiduciary duty is a serious matter. Even if you feel you were clearly in the right, you will still have to provide a solid defense to every aspect of the claim.
What elements have to be proven for the accusation to hold up?
What type of duty did you owe?
Depending on the nature of your business relationship, you may owe different fiduciary duties to your clients. If you are tasked with making investments on their behalf, then you must act in good faith and make educated decisions that are in line with your skills and their strategies.
Was that duty breached?
There is always an element of risk in any business transaction. Your client has to bear some of that risk. If you have acted above board and in their best interests, then you should not automatically be held responsible if the deal is not profitable.
For instance, you cannot be held accountable for crashes in the market that were out of your control. However, if the client believes you failed to disclose pertinent information that may have given them an opportunity to make adjustments, they may blame you for their losses.
Did the breach cause financial losses?
Finally, for a breach of fiduciary claim to stand up, the client must have suffered quantifiable damages. They must prove that it was your alleged breach of duty that caused them to lose money or assets.
Accusations do not automatically equate to a claim. Don’t assume you can handle this on your own. There is far too much at stake. We help individuals and entities who are facing accusations of fiduciary breaches. Contact us to learn about your options and next steps.