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is this question placed for the purposes of a commercial litigation or is it purely academic?

John Murphy wrote:

Does anyone know of a good text (or cases) on the liability of stock brokers to clients in the following circumstances:

1. The client, C, is fraudulently induced by a fraudster, F, to purchase a worthless computer program which allegedly will give buy/sell signals on the exchange-traded options market sufficiently accurate to enable the client to own all the money in the world inside 5 years (One wonders how otherwise intelligent people fall for this stuff, but I expect greed beats brains any day).

2. F recommends that C should use B as a broker to execute the trades. B, in fact, has allowed F to use B's well-known logo in F's glossy advertising material.

3. B knows that C's orders to it are based on the output from the program.

4. B also knows, at least from experience with many other victims of the fraud, if not from actually trying it himself, that the program doesn't do what C thinks it can do and that, consequently, C is about to lose his shirt.

5. Nevertheless, B executes the trades and pockets the commission.

Regards

John Murphy

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John Murphy
Barrister-at-Law
160 Hellawell Road
Sunnybank Hills
Qld 4109
Australia
+61 7 3273-7193