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The Tort of Giving Negligent Investment Advice

81 Pages Posted: 15 Oct 2008 Last revised: 14 Mar 2011

Seth Lipner

City University of New York (CUNY) - Department of Law

Lisa A. Catalano

St. John's University - School of Law

Date Written: October 14, 2008


This article is a novel study of the common-law responsibility of investment advisors to exercise due diligence when providing advice to their clients. The article chronicles the development of the tort of negligent misrepresentation, from its inception in a series of watershed New York cases, through the creation of Restatement (Second) Torts 552, and culminating in analysis of how the courts around the country have applied these concepts to the specifics of securities brokers, investment advisors and others involved in either promoting investments or providing information about them.

The number of cases brought by investors against investment banks and brokerages grows every year. A large percentage of these cases involve allegations of negligence. But despite the spate of cases in this area, there has been no significant scholarship. This article fills the gap.

In researching and writing this piece, the authors have combined their experience as practitioners with their talents as academics and legal scholars. In doing so, they are able to expound authoritatively on the recent developments that have caused the law in this area to coalesce and advance.

The combination of (a) the ubiquity of cases in this area and (B) the paucity of existing legal scholarship will result in an article that will be cited by courts and commentators for years to come.

Suggested Citation

Lipner, Seth and Catalano, Lisa A., The Tort of Giving Negligent Investment Advice (October 14, 2008). University of Memphis Law Review, Vol. 39, p. 663, 2009; St. John's Legal Studies Research Paper No. 08-0155. Available at SSRN:

Seth Lipner

City University of New York (CUNY) - Department of Law ( email )

New York, NY
United States

Lisa A. Catalano (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States

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