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I have many a times seen people deal with their Stock Brokers telling them to sell or buy shares and as the prices fluctuate quite quickly they don't have the time to get everything in writing. I once asked one such person and they said the broker would keep an Audio Recording of the conversation as evidence of having been told to perform the transaction however is this evidence even valid? I believe it can easily be fabricated by someone. Also someone after losing money might just go and say that I didn't give the order and that my phone was stolen or something. Are there precedents for such incidents? How does the court rule then?

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is this evidence even valid?

It can be. The client would need other evidence to dispute or discredit the broker's audio recording if the client posits the recording was altered or fabricated.

Regarding a client's denial of having given certain order(s) to the broker, the parties should show to the fact-finder the evidence (circumstantial and otherwise) they have. For instance,

  • did the client timely report to the police that his phone was stolen? what information does the police report/investigation reveal?

  • does he typically conduct certain transactions over the phone as opposed to through a computer/laptop?

  • is the timing of the transactions consistent with market hours?

  • what nexus can the client establish between the thief and the broker or a third-party who benefited the transaction? Given the process of market-making and transaction matching, it seems very unlikely that the thief would have control over who made a profit from that transaction.

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  • Can you add some precedents as well? Nice points btw – FoundABetterName Aug 2 at 19:45
  • You mean precedents of what? The issue of credibility of evidence is routinely mentioned in court opinions as something that the fact-finder (i.e., jury) determines, although that issue in and of itself has no precedential value. In other words, that issue is too elementary to prompt a court to classify its decision as precedent. As for disputes between a provider/broker and a client, it will be quite difficult/unlikely to find court opinions --let alone case law-- centered on an alleged falsification of a client's order(s). – Iñaki Viggers Aug 2 at 22:10
  • got it thanks for the info – FoundABetterName Aug 3 at 4:25
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A broker might record a phone conversation: if they do, it matters whether (a) they announce that they are recording and (b) whether they or the other part are in an all-party jurisdiction (some places, all parties to a private communiction have to consent, in others, only one party does). If the recording is taken illegally, then it can't be used as evidence in the case of a lawsuit. Assuming we've passed that filter, then the recording would be good evidence that the customer gave the order. However, a forensic investigation might provide sufficient evidence that the recording had been manipulated. Or, the customer might claim "that wasn't my voice". Both sides would call on the services of specialists in speech acoustics to make their case. Then it comes down to the question of which argument is most compelling. The burden really rests on the parties who have to come up with good arguments.

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  • Can you add some precedents as well? Otherwise very well written – FoundABetterName Aug 2 at 19:44
  • Depends on which point you're interested in. For example Kearney v. Salomon Smith Barney, Inc., 137 P.3d 914 (2006) for all-party consent? – user6726 Aug 2 at 20:16
  • Many (most?) jurisdictions admit illegally collected evidence in civil trials and a lot do in criminal trials as well. – Dale M Aug 2 at 22:35
  • Thanks for the reference will check it out – FoundABetterName Aug 3 at 4:26

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