“[I]n judging the appropriate standard of care that attaches to a broker-dealer in recommending securities to his or her customers and in dealing with the customers’ accounts, the Commission has relied upon the ‘shingle theory.’ The shingle theory is but an extension of the common law doctrine of ‘holding out.’ When brokers hold themselves out as experts either in investments in general or in the securities of a particular issuer, they will be held to a higher standard of care in making recommendations.” Thomas Lee Hazen, The Law of Securities Regulation § 10.6, at 423 (2d ed. 1994).
shingle theory
shingle theory. Securities. The notion that a broker-dealer must be held to a high standard of conduct because by engaging in the securities business (“hanging out a shingle”), the broker-dealer implicitly represents to the world that the conduct of all its employees will be fair and meet professional norms. [Cases: Securities Regulation 27.21, 60.32(1). C.J.S. Securities Regulation §§ 76, 164, 195, 217.]
