Broker-Dealers Have No Duty To Noncustomers

Law360, New York (December 9, 2010, 4:50 PM EST) -- In a case of first impression in New Jersey, the Appellate Division has held that a securities broker-dealer does not owe a duty to noncustomers. Frederick v. Smith, 2010 N.J. Super. LEXIS 212, **6-10 (App. Div. Nov. 9, 2010). Frederick follows a number of federal court cases that have dismissed claims sounding in negligence brought by noncustomers against financial institutions (including broker-dealers) based on the lack of a duty owing to the noncustomers, including claims that the financial institutions were negligent in failing to detect and...
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