Shingle Theory

Shingle Theory

Informal for a fiduciary duty. The term refers to a broker who "hangs a shingle" or a sign advertising his/her services and therefore has a legal and ethical responsibility to act in the client's best interests.
References in periodicals archive ?
64) The shingle theory presumes that being a broker-dealer involves hanging out a shingle to solicit customers.
In addition to applying the shingle theory against brokers who have recommended securities that are unsuitable for their customers, courts use the suitability doctrine to regulate broker-dealer conduct under section 10(b).
A final example of securities fraud under the shingle theory arises from allegations of brokers charging their clients excessive price markups.
88) She observed that the development of the shingle theory falls to the SEC and SROs through their disciplinary proceedings instead of the courts because "most cases between broker-dealers and customers now are relegated to arbitration.
Both principles of fiduciary law and the more recent shingle theory provide justifications for imposing such an obligation.