## Facts

- Dr. Thomas F. Puckett and Mildred M. Puckett opened commodity futures accounts with Rufenacht, Bromagen & Hertz, Inc. (RB&H), a brokerage firm with a Mississippi branch office.
- Dr. Puckett was financially successful and had decades of securities trading experience, including prior commodity trading that resulted in losses.
- The Pucketts completed new-account forms listing limited “risk capital” and signed written risk disclosure statements acknowledging they read and understood warnings that commodity futures trading involves substantial risk of loss and may be unsuitable depending on financial condition.
- The accounts were nondiscretionary; RB&H executed trades only with the Pucketts’ authorization and did not control trading decisions.
- Over roughly 38 months, Dr. Puckett engaged in heavy trading through RB&H and eventually incurred losses exceeding $2 million.
- The Pucketts claimed RB&H was negligent and breached fiduciary duties by failing to monitor the trading and stop or restrict further transactions once losses became severe.

## Issues

1. Whether a commodities broker handling a nondiscretionary account owes a Mississippi-law negligence duty to monitor trading and restrain or refuse further customer-authorized trades when the customer is experiencing large losses or appears reckless.
2. Whether the nondiscretionary broker-customer relationship creates a fiduciary duty requiring the broker to protect the customer from the consequences of the customer’s own trading decisions by intervening, warning, or refusing trades.

## Decision

- The Mississippi Supreme Court answered the certified questions in favor of RB&H.
- Mississippi law does not impose a general negligence duty on a commodities broker to refuse or restrain authorized trades in a nondiscretionary account based on the customer’s losses or alleged imprudence.
- The nondiscretionary relationship, on these facts, did not create the broad fiduciary duty claimed; the broker was not required to act as a guardian to prevent speculative losses.
- The answers supported summary judgment for RB&H on the state-law negligence and fiduciary-duty claims.

## Legal Principles

- In a nondiscretionary commodities account, the customer controls trading decisions; the broker’s primary obligations are accurate, good-faith execution and compliance with applicable disclosure duties.
- Mississippi law does not recognize an affirmative duty requiring a broker to override an adult customer’s authorized transactions merely because trading is risky or losses are large.
- A fiduciary duty to manage or protect a client’s trading typically depends on discretionary authority or a special relationship; absent such authority, fiduciary obligations do not extend to vetoing customer-directed trades.
- Clear, acknowledged risk disclosures and the customer’s sophistication support allocating responsibility for speculative losses to the customer rather than the executing broker.

## Conclusion

Mississippi rejected negligence and fiduciary-duty theories that would require a broker for a nondiscretionary commodities account to monitor and halt customer-authorized trading to prevent losses, limiting broker duties largely to honest dealing, required disclosures, and proper execution.


Puckett v. Rufenacht, Bromagen & Hertz, Inc., 587 So. 2d 273 (Miss. 1991)