A breach of contract claim can be established against a financial professional or firm if there was an existence of a valid contract, a breach of that contract, and damages resulting from the breach. A contract almost always exists because of the account-opening documents you signed with your financial professional, which includes the contractual provision that mandates FINRA Arbitration for any disputes that arise. The provision also binds firms and professionals to comply with FINRA rules and regulatory requirements with regard to your account. Thus, any breach of a FINRA rule by a financial firm or professional is by definition a breach of the arbitration provision set out in your account-opening documents.

Inherent in every contract is also what is called the covenant of good faith and fair dealing. This means that when the financial firm entered into the contract with you, it committed to act in good faith, make suitable investment recommendations, make honest representations, and properly supervise its employees and the transactions within your account. Thus, even if a firm complies with a contract to the letter, it could still be held liable for a breach of contract if the firm (or its employee) acted in bad faith or in a manner that would be considered unfair towards the investor.