Shingle Theory


DEFINITION of 'Shingle Theory'

A suitability doctrine first introduced by the Securities and Exchange Commission in the 1930s. The idea is that a broker who hangs out a shingle will represent his or her customers fairly and responsibly when making suggestions regarding securities.

BREAKING DOWN 'Shingle Theory'

Also referred to as "fiduciary duty", these suitability doctrines were originally used to ensure the protection of investors from unscrupulous broker-dealers.

Here, "shingle" refers to a small sign, indicating a professional office.

  1. Fiduciary

    A fiduciary is a person who acts on behalf of another person, ...
  2. Security

    A financial instrument that represents an ownership position ...
  3. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  4. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  5. Brand

    A distinguishing symbol, mark, logo, name, word, sentence or ...
  6. Catalyst

    A catalyst in equity markets is a revelation or event that propels ...
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