The Study on Suitability Doctrine and Security Fraud

• Main Authors: Hung-Wen Shih, 施弘文
• Other Authors: Syue-Ming Yu
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/17331665427169626055

碩士 === 銘傳大學 === 法律學系碩士班 === 100 === Lehman Brothers filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer on Sept. 15, 2008. Its collapse sent global financial markets into a panic and brought credit markets worldwide to the edge of a meltdown. Many investors in our country who purchased the structured note issued from Lehman Brothers also suffered huge losses. These investors often had no idea what they had purchased and were often misled as to the safety of these securities. Thus, the responsibilities of the broker have been increasingly important. One of the most important doctrines under the federal securities laws is the suitability doctrine. The suitability doctrine was originally as an ethical standard by the NASD, it may be broadly defined as a duty on the part of the broker to recommend to a customer only those securities which are suitable to the investment objectives and peculiar needs of that particular customer. This duty has two dimensions, “customer-specific” suitability, which focuses on the financial objectives, needs, and other circumstances of the particular customer; and “reasonable-basis” suitability, which focuses on the characteristics of the recommended security. In the United States practice, the court determined that suitability claims were independently supported by Rule 10b-5, but it is a question that the suitability claims could also be held in the Securities and Exchange Act in our country. On the other hand, the alternative dispute resolution plays another role in the settlement of financial consumption disputes in our country. The Financial Consumer Protection Law which is promulgated on 29 June 2011, is the other way to provide investors to deal with their financial consumption disputes more reasonably and efficiently.