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 ?
The second and less traditional approach to the obligations that broker-dealers have toward their clients is the so-called shingle theory. (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.
One commentator has argued that the shingle theory's presumption that broker-dealers make an implied representation that they will deal fairy with their clients is, ultimately, a legal fiction.
Both principles of fiduciary law and the more recent shingle theory provide justifications for imposing such an obligation.
1943) (containing the judicial origin of the shingle theory).