If you have suffered investment losses due to broker misconduct, unsuitable recommendations, or supervisory failures at Fidelity Brokerage Services, you may have legal options to recover your money. Fidelity, one of the largest broker-dealers in the United States, has faced numerous regulatory actions, fines, and investor claims over the years. Understanding your rights and the claims process can help you determine whether you have a viable case.
Key Takeaways
- Fidelity Brokerage Services (CRD #7784) has faced numerous FINRA fines and regulatory actions for supervisory failures
- Common claims include failure to supervise, unsuitable recommendations, and breach of fiduciary duty
- FINRA arbitration typically resolves cases in 12-16 months, faster than traditional litigation
- You generally have six years from the date of misconduct to file a FINRA arbitration claim
- Approximately 70% of FINRA customer cases settle before reaching a hearing
Recent Regulatory Actions Against Fidelity
Fidelity Brokerage Services LLC has faced significant regulatory scrutiny in recent years. The firm has been subject to multiple enforcement actions by FINRA, the SEC, and state regulators for supervisory failures and other violations. Recent actions demonstrate a pattern of compliance issues:
2025 FINRA Action: Fidelity was fined $600,000 for supervisory failures that allowed an employee to convert approximately $750,000 from international Stock Plan Services accounts over an eight-year period (2012-2020). FINRA found that Fidelity lacked effective monitoring systems for outgoing transactions, allowing 83 unauthorized checks and 183 wire transfers to go undetected.
| Year | Regulator | Fine Amount | Violation |
|---|---|---|---|
| 2025 | FINRA | $600,000 | Supervisory failures – employee misconduct |
| 2023 | FINRA | $900,000 | Options trading due diligence failures |
| 2022 | Massachusetts | $750,000 | Options and margin trading supervision |
| 2004 | SEC/NYSE | $2,000,000 | Document alteration and destruction |
Types of Claims Against Fidelity
Investors who have suffered losses at Fidelity may be able to pursue claims based on several legal theories. Each type of claim has specific elements that must be proven to recover damages. The most common types of claims against Fidelity brokers and the firm itself include:
Failure to Supervise
Under FINRA Rule 3110, brokerage firms must establish and maintain supervisory systems to ensure compliance with securities laws. When Fidelity fails to properly supervise its brokers and employees, the firm can be held liable for resulting investor losses.
Unsuitable Recommendations
Brokers have an obligation to recommend investments suitable for each client based on their age, risk tolerance, investment objectives, and financial situation. When Fidelity advisors recommend products that do not match your investment profile, you may have a claim.
Breach of Fiduciary Duty
Under SEC Regulation Best Interest, brokers must act in their clients’ best interests. When compensation incentives or sales pressure cause brokers to prioritize their own interests over yours, this can constitute a breach of fiduciary duty.
Misrepresentation and Omissions
Brokers must disclose all material facts about investments, including risks. If your Fidelity advisor misrepresented an investment’s characteristics or failed to disclose important information, you may be able to recover your losses.
Fidelity Tier 3 Investment Claims
Recent litigation has brought attention to claims involving Fidelity’s Tier 3 investment products. According to a wrongful termination lawsuit filed by former Fidelity advisor Michael Maeker, between 2019 and 2023, Fidelity allegedly:
- Pressured advisors to move clients into higher-revenue generating investments
- Offered compensation incentives for placing client assets in Tier 3 products
- Threatened career ramifications for advisors who did not comply
- Violated SEC Regulation Best Interest requirements
What Are Tier 3 Investments? These are typically higher-fee investment products that generate more revenue for the firm. If you were moved into Tier 3 products without a clear explanation of why they were suitable for your specific situation, you may have grounds for a claim.
Recent Fidelity Arbitration Awards
Investors have successfully recovered substantial amounts through FINRA arbitration against Fidelity:
$622,000 Award
An 86-year-old investor recovered $622,000 through FINRA arbitration, including $272,000 in attorney fees and costs. The award exceeded the total compensatory damages originally requested by approximately $100,000.
$4 Million Award
Shareholders secured a $4 million FINRA arbitration award against their broker-dealer, demonstrating that significant recoveries are possible when investor claims are properly presented.
Ongoing Claims
In January 2025, four investors filed claims against Fidelity alleging the firm failed to supervise advisor Thomas Chadwick, who was later barred from the industry and ordered to pay nearly $5 million in restitution.
The FINRA Arbitration Process
Most claims against Fidelity are resolved through FINRA arbitration rather than traditional court litigation. When you open a brokerage account, you typically sign an agreement requiring disputes to be resolved through FINRA’s dispute resolution forum.
Seven Stages of FINRA Arbitration
| Stage | Description | Typical Timeline |
|---|---|---|
| 1. Filing | Submit Statement of Claim with filing fee | Day 1 |
| 2. Response | Fidelity submits answer to your claims | 45 days |
| 3. Arbitrator Selection | Both parties rank and strike potential arbitrators | 2-3 months |
| 4. Prehearing Conference | Discuss procedures and schedule hearings | 3-4 months |
| 5. Discovery | Exchange documents and gather evidence | 4-10 months |
| 6. Hearing | Present evidence and testimony to arbitrators | 10-14 months |
| 7. Award | Arbitrators issue final, binding decision | 30 days after hearing |
FINRA Arbitration Statistics
According to FINRA’s 2024 Dispute Resolution Statistics:
Case Resolution
- 70% of customer cases settle before hearing
- 87% mediation success rate
- 12.5 months average case duration
Customer Win Rates
- 26% overall customer win rate at hearing
- 31% win rate in regular hearings
- 45% win rate in Zoom hearings
Statute of Limitations for Fidelity Claims
Time limits apply to filing claims against Fidelity. Understanding these deadlines is critical to preserving your rights:
- FINRA Arbitration: Claims must generally be filed within six years of the occurrence or event giving rise to the claim under FINRA Rule 12206
- State Securities Laws: Varies by state, typically 2-4 years
- Federal Securities Laws: Varies by specific violation
Do Not Delay: Evidence can become harder to obtain over time, and witnesses’ memories fade. If you believe you have a claim against Fidelity, consult with a securities attorney as soon as possible to evaluate your options before deadlines expire.
What Evidence Supports a Fidelity Claim
Building a strong case against Fidelity requires gathering documentation that demonstrates the misconduct and your resulting losses. The more documentation you can provide, the stronger your case will be. Your securities attorney can also issue discovery requests to obtain additional evidence from Fidelity during the arbitration process. Key evidence includes:
- Account Statements: Monthly and quarterly statements showing account activity, positions, and values over time
- Trade Confirmations: Records of individual transactions in your account, including trade dates, prices, and commissions
- Account Opening Documents: Applications showing your stated investment objectives, risk tolerance, and time horizon
- Communications: Emails, letters, text messages, and notes from conversations with your advisor about investment decisions
- New Account Form: The document recording your financial situation, net worth, and investment experience when you opened the account
- BrokerCheck Report: Your broker’s regulatory history from FINRA BrokerCheck, including any prior customer complaints or disciplinary actions
- Marketing Materials: Any brochures, presentations, or materials your advisor provided when recommending investments
Red Flags That May Support a Claim
When reviewing your account documents, look for these warning signs that may indicate misconduct:
- Frequent trading activity that does not align with your stated investment objectives
- Concentration in a single investment or sector that exposes you to unnecessary risk
- Investments that are inconsistent with your age, income, or stated risk tolerance
- Significant losses that occurred shortly after an advisor recommendation
- Fees and commissions that seem disproportionate to your account size
- Trades executed without your prior knowledge or authorization
Why Choose a Securities Attorney with Defense Experience
When pursuing claims against a major broker-dealer like Fidelity, having an attorney who understands how these firms defend themselves provides a significant advantage.
Gary Varnavides spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers against investor claims. This experience provides invaluable insight into the strategies, arguments, and tactics that firms like Fidelity use to defend against arbitration claims. By understanding the defense playbook, we can anticipate their arguments and build stronger cases for our clients.
Defense-Side Insight
- Knows how firms evaluate and defend claims
- Understands internal compliance procedures
- Anticipates defense strategies before they are raised
Credentials
- Super Lawyers Rising Star 2015-2023
- Licensed in California and New York
- Former defense counsel for broker-dealers
Fee Structure for Fidelity Claims
We handle most Fidelity investment claims on a contingency fee basis:
- No upfront attorney fees: You pay nothing unless we recover money for you
- Fee percentage: Discussed during your free consultation based on case specifics
- Case costs: You remain responsible for case costs, which may include filing fees, expert witnesses, and deposition transcripts
We can discuss cost estimates and payment arrangements during your consultation to ensure you understand the financial aspects before moving forward.
Frequently Asked Questions About Fidelity Claims
What types of misconduct can I file a claim against Fidelity for?
You can file claims for various types of broker misconduct, including failure to supervise, unsuitable investment recommendations, breach of fiduciary duty, misrepresentation, omissions of material facts, churning (excessive trading), and unauthorized trading. The specific claims will depend on the facts of your situation.
How long do I have to file a claim against Fidelity?
Under FINRA Rule 12206, you generally have six years from the occurrence or event giving rise to your claim to file FINRA arbitration. However, state law claims may have shorter limitation periods. It is important to consult with an attorney promptly to ensure you do not miss any deadlines.
What is the difference between FINRA arbitration and a lawsuit?
FINRA arbitration is typically faster (12-16 months versus years in court), less formal, and conducted by arbitrators rather than judges and juries. When you opened your Fidelity account, you likely signed an agreement requiring disputes to be resolved through arbitration. Arbitration awards are final and binding with very limited appeal rights.
How much does it cost to file a FINRA arbitration claim?
FINRA filing fees range from $225 to $4,000 depending on the amount in dispute. Additional costs may include attorney fees, expert witness fees, and administrative expenses. Many securities attorneys, including our firm, handle cases on a contingency basis, meaning you pay no attorney fees unless you recover.
What percentage of FINRA arbitration cases does the investor win?
According to FINRA’s 2024 statistics, approximately 26% of cases that go to a final hearing result in an award for the customer. However, 70% of cases settle before reaching a hearing, and settlements often include compensation for investors. The success rate varies based on the strength of the case and quality of representation.
Can I recover my losses if my Fidelity broker left the firm?
Yes. Brokerage firms are responsible for supervising their brokers and can be held liable for misconduct that occurred while the broker was employed by the firm. You can pursue claims against both the individual broker and Fidelity Brokerage Services LLC. Even if your broker has left or been barred from the industry, the firm may still be liable.
What if Fidelity does not pay an arbitration award?
If Fidelity or one of its brokers fails to pay an arbitration award within 30 days, they face suspension from FINRA and cannot sell securities until they comply. Major broker-dealers like Fidelity typically pay awards promptly to maintain their FINRA membership and reputation.
Should I try to resolve my complaint with Fidelity directly first?
You may contact Fidelity’s compliance department, but be aware that communications with the firm could be used against you later. Before making any statements to Fidelity about your claims, consider consulting with a securities attorney who can advise you on the best approach and help protect your rights.
Take the First Step Toward Recovery
If you have suffered investment losses at Fidelity due to broker misconduct, unsuitable recommendations, or supervisory failures, you deserve to understand your legal options. Our firm provides a free, confidential consultation to evaluate your potential claim and explain the arbitration process.
Free Case Evaluation
Schedule a free consultation to discuss your Fidelity investment losses. We will review your account statements, explain your options, and provide an honest assessment of your potential claim.
Prior results do not guarantee a similar outcome. This page is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by viewing this content.
