Breaches of fiduciary duties happen more frequently than many people might realize. Often, the violation occurs because of a lack of awareness rather than bad intentions. When one realizes that a fiduciary duty was not met, it is best to take immediate action to mitigate the damage and correct future conduct.
You will want to get legal advice from a Miami, Florida business attorney on how to rectify a breach of fiduciary duty case.
Fiduciary relationships are common in the business world, according to the American Bar Association (ABA), including these situations:
- Corporations and partnerships
- Trustees, agents, and estate representatives
- Stockbrokers and financial advisors
- Real estate agents and brokers
- Lenders, ERISA, and professionals
- Clergy and religious organizations
Individuals and organizations can have fiduciary duties toward others, meaning that they have a legal duty to put the interests of the client or other party ahead of their own interests. Fiduciary duties can also include the obligation to notify, take specific actions, keep records, and provide regular accounting and reports.
Business relationships can create fiduciary duties like the duty of care, loyalty, confidentiality, good faith, fair dealing, full disclosure, and the duties to account and to act fairly. When a fiduciary acts in a manner that is contrary to the fiduciary duty, there can be severe legal consequences.
Breach of Fiduciary Duty
You do not have to prove that the fiduciary had a criminal or fraudulent motive when violating a fiduciary duty. You merely need to show that the breach occurred. Because a fiduciary gets held to the highest standard of conduct, the law can come down hard on a fiduciary who, for example, gains any type of financial benefit at the expense of the client. The simple failure to disclose a fact about which the fiduciary should have been transparent can be grounds for a breach of fiduciary complaint.
Your company’s reputation is at stake when someone in your organization gets accused of violating a fiduciary duty. You do not want to ignore the situation and hope that it will magically disappear. It can take years to rebuild trust in the integrity of your business.
Steps to Take After an Accusation of a Fiduciary Breach
Every situation is different, but here are some suggestions of actions you might want to consider taking:
- Investigate immediately. Some people make false complaints just to try to get a quick settlement. You should not assume, however, that the allegations are false. Perform a thorough investigation at once and secure all relevant evidence.
- Get legal advice. Depending on the circumstances of the fiduciary relationship and the breach of duty, there could be devastating legal consequences. Criminal charges can get filed. Fines and penalties could get assessed against your company. Your business insurance might not cover this situation. The fiduciary party could face the loss of their professional license, which could end their career. Restitution could require the repayment of all ill-gotten gains.
- When the investigation proves that someone in your company breached a fiduciary duty, the best advice is usually to terminate the individual’s employment. Anything less will appear to the business community as an endorsement of the unethical conduct. People will assume that your entire organization is untrustworthy if the breaching party stays employed with your company.
- With the advice of your attorney, make things right. If someone who trusted your organization suffered a financial loss because of a violation of a fiduciary duty, do not wait for a judge to order you to restore what the client lost. Be proactive in doing the right thing.
- Write company policies that set up protocols so that this type of situation cannot happen in the future.
Breaches of fiduciary are challenging situations that could damage your company’s reputation. Working with a Miami, Florida, business attorney could be a smart move. Contact our office today for legal help, we offer a free consultation.