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Person X asks person Y to manage a brokerage account for him. Person X asks that the money be managed in a conservative way. Person Y agrees to do. Person X does not compensation person Y in any way.

Person Y then aggressively invests the money and loses most of it. Can person X sue and win?

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  • Idk if they have standing, but since being agressive/conservative with investments is extremely subjective, good luck proving it
    – Nicolas Formichella
    Commented Jan 7 at 22:46

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Possibly

Person Y is possibly in a fiduciary relationship with Person X. Person Y is acting as an agent and possibly a broker for Person Y - both of these positions create a fiduciary relationship.

A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

— Lord Millett, Bristol and West Building Society v Mothew

The fiduciary's duty is to act in the other person's best interests. That does not necessarily mean following the other person's instructions, but if they don't, they should have a very good reason for why they didn't.

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  • Can't you provide some certainty?
    – Greendrake
    Commented Jan 8 at 5:07
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    @Greendrake what? And do the courts out if their livelihood? This is an equitable remedy which means it’s at the discretion of the court who will need to consider a lot of circumstances that have not been shared.
    – Dale M ♦
    Commented Jan 8 at 10:19
  • Court's discretion does not mean complete arbitrariness. There is always a principle which is to be followed. The circumstances are all simple, provided in the question.
    – Greendrake
    Commented Jan 8 at 10:34
  • @DaleM What factors, not started in the question, would create a fiduciary relationship?
    – Bob
    Commented Jan 9 at 4:54
  • @Bob Details of the relationship
    – Dale M ♦
    Commented Jan 9 at 8:51
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Can person X sue and win?

No (unless they bribe the judge).

No contract

There is no contract for 2 reasons:

No fiduciary duty

Friendship alone does not usually equal a fiduciary relationship (Gill v. Grewal, No. 4:14-cv-2502).

However, if there is proof that Y did something malicious (e.g. set up the targets of those aggressive investments to channel the funds into their pocket), they could be prosecuted.

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  • A contract is also a contract regardless of form, unless otherwise stated by law (e. g. for real estate in Germany a written contract sign by a solicitor)
    – planetmaker
    Commented Jan 9 at 7:50
  • @planetmaker If X and Y were strangers to each other, a verbal contract would be fine. Not so when they are friends — some extra evidence is required e.g. a written contract, even if not required by statute.
    – Greendrake
    Commented Jan 9 at 8:41

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