Henryk De Kwiatkowski v. Bear, Stearns & Co., Inc., Bear, Stearns Securities Corporation, and Bear Stearns Forex Inc., and Albert J. Sabini

In a period of less than five months-in 1994-95, plaintiff Henryk de Kwiatkowski (“Kwiatkowski”) made and lost hundreds *1296 of millions of dollars betting on the U.S. dollar by trading in currency futures. Kwi-atkowski traded on a governmental scale: At one point, his positions accounted for 30 percent of the total open interest in certain currencies on the Chicago Mercantile Exchange. After netting over $200 million in the first trading weeks, Kwiatkowski’s fortunes turned; between late December 1994 and mid-January 1995, Kwiatkowski suffered single-day losses of $112 million, $98 million, and $70 million. He continued losing money through the winter. Having lost tens of millions over the preceding several days, Kwiatkowski liquidated all his positions starting on Sunday, March 5 and finishing the next day. In all, Kwiat-kowski had suffered net losses of $215 million.

In June 1996, Kwiatkowski sued the brokerage firm (and related entities) that had executed his trade orders, Bear, Stearns & Co., Inc., Bear, Stearns Securities Corporation, and Bear Stearns Forex Inc. (collectively, “Bear Stearns” or “Bear”), as well as his individual broker, Albert Sabini (“Sabini”), alleging (inter alia) common law negligence and breach of fiduciary duty. At trial, Kwiatkowski contended that Bear and Sabini failed adequately to warn him of risks, failed to keep him apprised of certain market forecasts, and gave him negligent advice concerning the timing of his trades.

In May 2000, a jury in the United States District Court for the Southern District of New York (Marrero, /.) found Bear negligent and awarded Kwiatkowski $111.5 million in damages. The jury found for Bear on the breach of fiduciary duty claim. Sa-bini prevailed on both claims.

Bear made timely motions for judgment under Fed.R.Civ.P. 50, arguing principally that Kwiatkowski’s account was a “nondis-cretionary” trading account (i.e., one where all trades require the client’s authorization), and that as to such accounts (as a matter of law) a broker has none of the advisory duties that Bear was found to have breached.

In an opinion dated December 29, 2000, the district court denied Bear’s motion for judgment. Kwiatkowski v. Bear Stearns & Co., Inc., 126 F.Supp.2d 672 (S.D.N.Y.2000). The court ruled that the unique facts and circumstances of the parties’ relationship permitted the jury reasonably to find that Bear undertook to provide Kwiat-kowski with services beyond those that are usual for nondiscretionary accounts, and that there was evidence sufficient to find that Bear provided those services negligently. The district court added $53 million to the jury’s damages award for prejudgment interest dating back to March 6, 1995, bringing Kwiatkowski’s total recovery to $164.5 million.

On appeal, Bear argues principally: [1] that as a matter of law, because Kwiatkow-ski was a nondiscretionary customer, Bear had no ongoing duty to provide him with information and advice; [2] that Bear did not undertake to provide ongoing advice and account-monitoring services; and [3] that Bear was not negligent in performing any of the services it did provide.

We reverse.

Background

The facts of this case are recounted in scrupulous detail in the district court’s opinion denying Bear’s Rule 50(b) motion. Kwiatkowski, 126 F.Supp.2d at 678-83. On appeal, we review the evidence (as the district court did) in the light most favorable to Kwiatkowski, resolving ambiguities in his favor. See Galdieri-Ambrosini v. Nat’l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir.1998) (“Judgment as a matter of law may not properly be granted under Rule 50 unless the evidence, viewed in the light most favorable to the opposing party, *1297 is insufficient to permit a reasonable juror to find in her favor.”).

A. Fads

For the most part, the operative facts are undisputed. Kwiatkowski first opened an account at Bear Stearns in 1988, when his broker, Albert Sabini, relocated there from the defunct E.F. Hutton firm! The account was handled by Bear’s “Private Client Services Group,” which provides large private investors with enhanced services, including access if requested to the firm’s executives and financial experts. As a member of this group, Sabini was in regular contact with Kwiatkowski, often communicating several times a day. Sabi-ni provided his client with news and market repoi’ts, and sometimes sent him Bear Stearns documents containing market forecasts and investment recommendations.

At first, Kwiatkowski’s account at Bear was limited to securities trading. His currency trading was conducted through Bank Leu, a bank in the Bahamas, where Kwiatkowski maintained his principal residence. In January 1991, Kwiatkowski opened a futures account at Bear by transferring from Bank Leu a position consisting of 4000 Swiss franc short contracts traded on the Chicago Mercantile Exchange (“CME”). Kwiatkowski effected the transfer because he thought Bear would be better able to service the account, Sabini having “extolled the capacity of Bear Stearns to provide him the full services and resources he needed for large-scale foreign currency trading.” Kwiatkowski, 126 F.Supp.2d at 679. The Private Client Services Group provided its clients with access to Bear’s financial experts and executives, id. at 678, and advertised “a level of service and investment timing comparable to that which [Bear] offer[ed its] largest institutional clients.” Id. at 702.

Kwiatkowski’s futures account at Bear was at all times “nondiscretionary,” meaning that Bear executed only those trades that Kwiatkowski directed. 1 When the account was opened in January 1991, Kwiat-kowski signed a number of documents and risk-disclosure statements (some of which were mandated by federal regulations). These reflect in relevant part that:

• Kwiatkowski declared his net worth to be in excess of $100 million, with liquid assets of $80 million;

• He was warned that “commodity futures trading is highly risky” and a “highly speculative activity,” that futures “are purchased on small margins and ... are subject to sharp price movements,” and that he should “carefully consider whether such [futures] trading is suitable for [him]”;

• He was warned that because, under some market conditions, he “may find it difficult or impossible to liquidate a position” — meaning that he “may sustain a total loss” of his posted collateral — he should “constantly review [his] exposure ... and attempt to place at risk only an amount which [he knew he could] afford to lose”;

• He was warned that if he chose to trade on margin, he could lose more than what he posted as collateral;

*1298 • He gave Bear a security interest in all his accounts at the firm, authorized Bear to transfer funds from his other account to his futures account if necessary to avoid margin calls, and authorized Bear to protect itself by liquidating his futures account if Kwiatkowski failed to meet margin requirements.

126 F.Supp.2d at 679.

Kwiatkowski’s trading strategy reflected his belief in the long-term strength of the U.S. dollar. As he testified at trial, he had believed “the dollar should appreciate” over time, though he conceded that he always understood that the dollar would experience “ups and downs” in the near term. Tr. 472-74.

Kwiatkowski had been an experienced currency trader before he opened his Bear Stearns futures account. As an entrepreneur and founder of Kwiatkowski Aircraft — which leases and sells airplanes internationally — he developed a background in trading to hedge the risks associated with his company’s foreign currency transactions. Kwiatkowski also had experience betting on the dollar in hopes of earning speculative profit. In 1990, shortly before transferring his Bank Leu position to Bear Stearns, Kwiatkowski lost nearly $70 million in that account when the dollar declined against the German mark and Swiss franc.

Before Kwiatkowski did his first currency transaction at Bear in September 1992, he met with Bear’s then-Chief Economist, Lawrence Kudlow, who expressed the view that the dollar was undervalued worldwide and therefore was a good investment opportunity. In the weeks following this meeting, Kwiatkowski executed several trades betting on the rise of the dollar, ultimately acquiring 16,000 open contracts on the CME. He closed his position in January 1993, having made $219 million in profits in about four months. At trial, Kwiatkowski testified that he consulted Bear prior to liquidating: “We discussed it and they thought the advisement was a change of feelings about it.” Tr. at 483. The record is vague as to who at Bear said what, but (construing ambiguities in Kwi-atkowski’s favor) a fair reading is that Kwiatkowski was encouraged by someone at Bear to liquidate his position.

Kwiatkowski’s futures account was dormant between January 1993 and October 1994. Kwiatkowski testified that in an October 1994 phone call, Sabini told him that “this is the time to buy the dollar,” and that “this time the dollar will do what [Kwiatkowski] always believed it would do.” Tr. 490. Kwiatkowski began aggressively short-selling the Swiss franc, the British pound, the Japanese yen, and the German mark. Within a month, Kwiat-kowski amassed 65,000 contracts on the franc, pound, yen, and mark in equal proportions — a position with a notional value of $6.5 billion. 2 All of the transactions were executed on the CME. At one point, Kwiatkowski’s position amounted to 30 percent of the CME’s total open interest in some of the currencies. According to David Schoenthal, the head of Bear Stearns Forex, Kwiatkowski’s position was more than six times larger than any other position Schoenthal had ever seen in 27 years on the CME. 3 Tr. 1111-12.

In mid-November 1994, after Kwiatkow-ski had acquired the bulk of his position *1299 (approximately 58,000 contracts), Sabini sent him a copy of a report by Wayne Angelí, then-Chief Economist at Bear, entitled “Dollar Investment Opportunity,” expressing the view that the dollar was still undervalued. According to Kwiatkow-ski, the report influenced him to “roll over” his entire 65,000-contract position past the December date on which the contracts came due.

Like many speculative investors, Kwiat-kowski traded on margin, meaning he put up only a fraction of the $6.5 billion notional value, as specified by the brokerage firm. As the dollar fluctuated, Kwiatkow-ski’s position was “marked-to-market,” meaning that his profits were added to his margin and his losses were deducted. As he earned profits, his margin increased, meaning he could opt (as he did) to have profits paid out to him daily; when losses reduced his margin, Kwiatkowski was compelled to meet the margin requirement by depositing more money or by liquidating contracts. Thus, while Kwiatkowski put up only a small percentage of the notional value (well under ten percent, which is apparently not unusual), his personal profits and losses reflected the full $6.5 billion position, and magnified vastly the slightest blip in the dollar’s value.

As Kwiatkowski acquired his colossal position in the volatile futures market, Bear took precautions. In November 1994, the firm’s Executive Committee and senior managers assumed oversight of Kwiatkowski’s account. Bear also required Kwiatkowski to increase his posted margin collateral to $800 million in cash and liquid securities.

In late November or early December, Sehoenthal told Bear’s Executive Committee that Kwiatkowski’s position was too conspicuous on the CME to allow a quick liquidation, and (with Sabini) recommended to Kwiatkowski that he move his position to the over-the-counter (“OTC”) market, the unregulated international commodities market whose traders generally consist of governments and large financial institutions. Sehoenthal told Kwiatkowski that he could trade with less visibility on the larger and more liquid OTC market, and more easily liquidate without impacting the market. According to Kwiatkow-ski, Sehoenthal told him that, when and if Kwiatkowski needed to liquidate, Schoen-thal could get him out of the OTC market “on a dime.” Tr. 502. Kwiatkowski accepted Schoenthal’s recommendation in part: when it came time to roll over his contracts in early December, Kwiatkowski moved half of them to the OTC market.

By late January 1995, Kwiatkowski’s account had booked breathtaking gains and losses. As of December 21, 1994 — less than two months after he resumed currency speculation at Bear — Kwiatkowski had made profits of $228 million. When the dollar fell a week later, Kwiatkowski lost $112 million in a single day (December 28). When the dollar fell again, on January 9, 1995, Kwiatkowski lost another $98 million. Ten days later, on January 19, he lost $70 million more. After absorbing these hits, Kwiatkowski was still ahead $34 million on his trades since October 28,1994.

As the dollar fell, Kwiatkowski consulted with Bear at least three times. After the December 28 shock, Kwiatkowski told Sehoenthal and Sabini he was concerned about the dollar and was thinking of closing his position. They advised him that it would be unwise to liquidate during the holiday season, when the markets experience decreased liquidity and prices often fall. 4 The dollar rebounded on December *1300 29, and Kwiatkowski recouped $50 million of the previous day’s losses.

After the January 9 decline, Kwiatkow-ski spoke with Sabini and Wayne Angelí, Bear’s Chief Economist. According to Kwiatkowski, Angelí thought that the dollar remained undervalued and would bounce back. Kwiatkowski decided to stand firm. In late January, he spoke with Schoenthal about the U.S. Government policy of strengthening the Japanese yen, and afterward Kwiatkowski liquidated half of his yen contracts.

The dollar remained volatile through the winter, due in large part (it was thought) to geopolitical currents. Two salesmen in Bear’s futures department, William Byers and Charles Taylor, who wrote a monthly report called Global Futures Market Strategies, announced in their February 1995 issue that they were downgrading the dollar’s outlook to “negative,” principally because of the Mexican economic crisis, certain steps taken by the Federal Reserve Board, and an anticipated increase in German interest rates. The report cited the German mark and the Swiss franc as especially likely to strengthen — two of the currencies in which Kwiatkowski held short positions. Kwiatkowski testified that he never received a copy of this report. 5

As of February 1Y, Kwiatkowski was down $37 million since October 1994. In mid-February, rather than deposit more cash, Kwiatkowski instructed Bear to meet future margin calls by liquidating his contracts. As the dollar declined, Bear gradually liquidated Kwiatkowski’s position (obtaining his approval of each trade). By the close of business on Thursday, March 2, 1995, Kwiatkowski’s total position had been reduced to 40,800 contracts in the Swiss franc and the German mark. He had suffered net losses of $138 million in slightly over four months.

Over the next three days, the dollar fell sharply against both the franc and the mark, and Kwiatkowski’s remaining contracts were liquidated at a further loss of $116 million.

On the morning of Friday, March 3, Bear tried to reach Kwiatkowski for authorization to liquidate 18,000 of his contracts in order to meet a margin call. Kwiatkow-ski was unavailable, so (as the account agreement allowed) Bear effected the liquidation unilaterally and secured Kwiat-kowski’s approval later that day. At that time, Kwiatkowski expressed interest in liquidating his position altogether. Schoenthal and Sabini advised Kwiatkow-ski that because market liquidity generally lessens on Friday afternoons, it would be prudent to hold on and take the chance that the dollar would strengthen. 6 According to Kwiatkowski, he relied on this ad *1301 vice in deciding to hold on to the balance of his contracts.

When the overseas markets opened on Sunday (New York time), the dollar fell. Schoenthal was in his office to monitor Kwiatkowski’s account and was in touch with Kwiatkowski throughout the day, obtaining Kwiatkowski’s authorization for necessary liquidating trades. By the early hours of Monday, the liquidation was complete. In order to cover his losses, Kwiat-kowski was forced to liquidate his securities account and pay an additional $2.7 million in cash. 126 F.Supp.2d at 682.

In all, Kwiatkowski suffered a net loss of $215 million in his currency trading from October 1994 through Monday, March 6, 1995. At trial, Kwiatkowski’s expert witness testified that Kwiatkowski could have saved $53 million by liquidating on Friday, March 3. The same expert surmised that $116.5 million would have been saved if Kwiatkowski had liquidated on Wednesday and Thursday, March 1 and 2.

B. Proceedings in the District Court

Of the various federal, state, and common law claims in the complaint, all but the claims for negligence and breach of fiduciary duty were dismissed in August 1997 by Judge Koeltl (who had initially been assigned to the case). By the consent of the parties, Kwiatkowski filed a Second Amended Complaint in October 1998, which re-pleaded the original claims on somewhat different theories. The amended pleading alleged that Bear had failed to give adequate warning about trading risks and adequate advice regarding liquidation of Kwiatkowski’s position. Bear again moved for summary judgment on all claims, arguing that under New York law, the duties it owed to a nondis-cretionary customer such as Kwiatkowski were limited to the faithful execution of the client’s instructions, and did not entail ongoing advice. In November 1999, the district court granted the motion in part, but refused to dismiss the breach of fiduciary duty and negligence claims, citing issues of fact as to whether Bear had undertaken advisory duties notwithstanding that Kwiatkowski’s account was at least nominally of the nondiscretionary kind. Kwiatkowski v. Bear, Stearns & Co., Inc., 96 Civ. 4798, 1999 WL 1277245, at *11-*16 (S.D.N.Y. Nov.29, 1999).

The case was reassigned to Judge Mar-rero, who conducted a jury trial in May 2000. At trial, Kwiatkowski contended that Bear had breached its duties in three ways: [1] Bear failed adequately to advise him about unique risks inherent in his giant currency speculation; [2] Bear failed to provide him with market information and forecasts, generated by Bear personnel, that were more, pessimistic about the dollar than views Kwiatkowski was hearing from others at Bear; and [3] Bear should have advised Kwiatkowski well before March 1995 to consider liquidating his position, and specifically should have advised him on Friday, March 3 to liquidate immediately rather than hold on through the weekend.

At the ’close of evidence, Bear moved for judgment under Fed.R.Civ.P. 50, arguing that it had owed Kwiatkowski no duty to give advice. Bear’s motion was denied. As to negligence, the district court instructed ' the jury (inter alia) that the defendants owed Kwiatkowski “a duty to use the same degree of skill and care that other brokers would reasonably usé under the same circumstances.'” Tr. 2283.

The jury found. Bear liable on the negligence claim, and awarded Kwiatkowski $111.5 million in damages. It found for Bear on the breach of fiduciary duty claim, and for Sabini tin both claims (verdicts from which no appeals have been taken). Bear renewed-its motion for judgment as a matter of law on the negligence claim un *1302 der Rule 50(b), and moved in the alternative for a new trial pursuant to Fed. R.Civ.P. 59.

The district court denied both motions, ruling (inter alia) that the evidence supported the finding of an “entrustment of affairs” to Bear that included “substantial advisory functions,” and that the services that Bear provided “embodied the full magnitude of ‘handling’ Kwiatkowski’s accounts, with all the considerable implications that such responsibility entailed.” Kwiatkowski, 126 F.Supp.2d at 701, 708.

Discussion

We must decide whether the facts of this case support the legal conclusion that Bear Stearns as broker owed its nondiscretion-ary customer, Kwiatkowski, a duty of reasonable care that entailed the rendering of market advice and the issuance of risk warnings on an ongoing basis. If so, we must decide whether a reasonable juror could find that Bear breached that duty.

I

It is uncontested that a broker ordinarily has no duty to monitor a nondis-cretionary account, or to give advice to such a customer on an ongoing basis. The broker’s duties ordinarily end after each transaction is done, and thus do not include a duty to offer unsolicited information, advice, or warnings concerning the customer’s investments. A nondiscretion-ary customer by definition keeps control over the account and has full responsibility for trading decisions. On a transaction-by-transaction' basis, the broker owes duties of diligence and competence in executing the Ghent’s trade orders, and is obliged to give honest and complete information when recommending a purchase or sale. The client may enjoy the broker’s advice and recommendations with respect to a given trade, but has no legal claim on the broker’s ongoing attention. See, e.g., Press v. Chem. Inv. Servs. Corp., 166 F.3d 529, 536 (2d Cir.1999) (broker’s fiduciary duty is limited to the “narrow task of consummating the transaction requested”); Independent Order of Foresters v. Donald, Lufkin & Jenrette, Inc., 157 F.3d 933, 940-41 (2d Cir.1998) (in a nondiscretionary account, “the broker’s duties are quite limited,” including the duty to obtain client’s authorization before making trades and to execute requested trades); Schenck v. Bear, Stearns & Co., 484 F.Supp. 937, 947 (S.D.N.Y.1979) (noting that the “scope of affairs entrusted to a broker is generally limited to the completion of a transaction”); Robinson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 337 F.Supp. 107, 111 (N.D.Ala.1971) (“The relationship of agent and principal only existed between [broker and nondiscretionary customer] when an order to buy or sell was placed, and terminated when the transaction was complete.”); Leib v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 461 F.Supp. 951, 952-54 (E.D.Mich.1978) (same; drawing distinction between discretionary and non-discretionary accounts); accord Paine, Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 516-17 (Colo.1986) (observing same distinction, and holding that existence of broad fiduciary duty depends on whether broker has “practical control” of customer’s account). As the district court observed, these cases generally are cast in terms of a fiduciary duty, and reflect that a broker owes no such duty to give ongoing advice to the holder of a nondiscretion-ary account.

The giving of advice triggers no ongoing duty to do so. See, e.g., Caravan Mobile Home Sales, Inc. v. Lehman Bros. Kuhn Loeb, Inc., 769 F.2d 561, 567 (9th Cir.1985) (securities broker had no duty to provide customer with information about stock after purchase was complete); Leib, 461 F.Supp. at 953 (broker has no duty to keep nondiscretionary customer abreast of *1303 “financial information which may affect his customer’s portfolio or to inform his customer of developments which could influence his investments”); Robinson, 337 F.Supp. at 112 (“[T]he broker has no duty to relay news of political, economic, weather or price changes to his principal, absent an express contract to furnish such information.”); Puckett v. Rufenacht, Bromagen & Hertz, Inc., 587 So.2d 273, 280 (Miss.1991) (“If a broker were under a duty to inform all of its customers of every fact which might bear upon any security held by the customer, the broker simply could not physically perform such a duty.”); Walston & Co. v. Miller, 100 Ariz. 48, 410 P.2d 658, 661 (1966) (“[A]ny. continuing duty to furnish all price information and information of all facts likely to affect the market price would be so burdensome as to be unreasonable.”).

From these principles, Bear argues that: it had no ongoing duty to give Kwiatkow-ski financial advice about his dollar speculation; its sole obligation was to “execute [Kwiatkowski’s] transactions at the best prices reasonably available and ... offer honest and complete information when recommending [a] purchase or sale”; and it had no “open-ended duty of reasonable behavior, or to provide such investment advice as a trier of fact decides would have been prudent.” As Bear points out, Kwi-atkowski makes no claim that any of his instructions were improperly carried out, or that he was given dishonest or incomplete information about any trade. Thus, when the district court instructed the jury to evaluate Bear’s overall conduct according to whatever a “reasonable broker” would have done under the circumstances, Bear argues, it allowed the jury to enforce advisory obligations that do not exist.

This argument, addressed to the features of nondiscretionary accounts, misses the point. The theory of the case is that this was no ordinary account (an observation that is true enough as far as it goes). Kwiatkowski contends that in the course of dealing, Bear voluntarily undertook additional duties to furnish information and advice, on which he came to rely (as Bear surely knew); that his trading losses were caused or enlarged by Bear’s failures to perform those duties; and that Bear’s liability arises from generally applicable tort rules requiring professionals to exercise ■due care in performing whatever services they undertake to provide, as measured against the standard observed by reasonable and prudent members of the profession.

II

The district court acknowledged the general principles limiting a broker’s duties to a nondiscretionary customer: it agreed that “[i]n the ordinary situation, the broker’s professional obligation to the customer with respect to any particular investment ends upon the completion of the authorized transaction.” Kwiatkowski, 126 F.Supp.2d at 691. Moreover, “[a]s regards a nondiscretionary account, the customer retains management and control over investment transactions, determining what purchases and sales to make. For the purposes of assessing the broker’s role and ascribing attendant legal duties, each transaction is considered separately.” Id. at 690 (internal citations omitted). But the court rejected what it calléd the “mechanical” argument that the nondiscretionary label disposed of Kwiatkowski’s claim. Id. at 691-92 (noting that if “a mere recitation of bare legal maxims were all there was to this matter, the action would present only an easy, garden-variety- dispute”). The court observed that the cases that articulate the general rules also allude to “special circumstances” that may “exempt the particular action from the scope of the general standard.” Id. at 692.

*1304 The court characterized Bear’s position as a “per se defense” that a broker’s duties to a nondiscretionary customer “not only exclude any obligation to offer advice, but may not even embrace a duty of ordinary, reasonable care.” Id. at 690. Reviewing principles of contract, negligence, and agency law, as well as case law concerning the broker/client relationship, see id. at 690-701, the district court concluded that, on the contrary, “a legal foundation exists which supports application of the duty of care to the broker/customer relationship between Kwiatkowski and Bear Stearns.” Id. at 700.

The court contrasted the general duty of due care with the duties that arise from the parties’ intentional relationship, which the court agreed are limited and narrowly defined:

[T]he duty of due care arises not by agreements or imposition of the parties governing their relations, but by operation of law. The duty emerges out of a totality of given circumstances and holds the defendant in an action to a standard of conduct designed to protect persons located within a reasonable zone of foreseeability who were injured .by a defendant’s careless behavior.

Id. at 694. The court explained that “contractual commitments cannot serve to excuse carelessness or shield a defendant from liability for injury that a breach of the duty of due care may engender.” Id. Just as “exceptional conditions” may create fiduciary duties without the parties’ “express intent,” and notwithstanding a contractual disclaimer, id. at 695, the court reasoned that “extraordinary events” may “support imposition of a duty of reasonable care arising from aspects of the same conduct on the part of the broker,” id. at 696. Such an extraordinary situation may arise from the “assumption, by promise or partial performance, of certain responsibilities under certain conditions.” Id. at 698 (citing the example of good Samaritan liability) (collecting cases).

The district court further ruled that the breach of the duty of care could “be evidenced by Bear Stearns’s failure to provide particular information essential to the affair's entrusted and which under all the circumstances a reasonable broker exercising ordinary care would have supplied to the client.” Id. at 700-01. The court indicated that a duty of care arose by virtue of the broker-client relationship itself, but also specifically considered that a duty of reasonable care arises when the parties depart from the usual rules of a nondiscre-tionary account, such as where the broker undertakes performance of additional functions. Consistent with this view, the jury was charged both that Bear had a general duty to behave as a reasonable broker 7 and that the jury should decide what functions Bear undertook and (thereby) had a duty to perform with reasonable care. 8

Accordingly, the court ruled that the jury’s verdict was sustainable on any one of several findings supportable by the record and the charge:

• Bear assumed substantial advisory functions that made it the “handler” of Kwiatkowski’s account, id. at 708, *1305 and that amounted to special circumstances sufficient to impose an ongoing duty of reasonable care. 9 Id. at 701.

• Even absent special circumstances, Bear breached the standard of care applicable to the ordinary broker/client relationship by the following: Bear’s execution of Kwiatkow-ski’s large trades in the fall of 1994 without conducting new risk and suitability analyses, id. at 711; 10 possible noncompliance with internal Bear procedures concerning notification to the client of increased risk, id. at 713-14, 717; the initial placement of Kwiatkowski’s position on the CME rather than the OTC market, id. at 712-18; giving overly optimistic advice (specifically, Schoen-thal’s statement that he could get Kwiatkowski out of the OTC market “on a dime,” and Angell’s opinion that the dollar was undervalued) in conjunction with the failure to furnish other, negative dollar forecasts, id. at 714-16; and the handling of the liquidation in March 1995. 11

• Even if Bear had no standing obligation (under ordinary or special circumstances) to provide Kwiatkowski with assistance, Bear nonetheless undertook to do so in connection with the March liquidation, and did so in a manner that was imprudent and that actually worsened Kwiatkowski’s situation. 12

Ill

No doubt, a duty of reasonable care applies to the broker’s performance of its obligations to customers with nondiscre-tionary accounts. See, e.g., Conway v. Icahn & Co., Inc., 16 F.3d 504, 510 (2d Cir.1994); Vucinich v. Paine, Webber, Jackson & Curtis, Inc., 803 F.2d 454, 460-61 (9th Cir.1986); Scott v. Dime Sav. Bank of New York, F.S.B., 886 F.Supp. 1073, 1080-81 (S.D.N.Y.1995); Fustok v. Conticommodity Servs., Inc., 618 F.Supp. 1082, 1085-86 (S.D.N.Y.1985); Cauble v. Mabon Nugent & Co., 594 F.Supp. 985, 992 *1306 (S.D.N.Y.1984); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Cheng, 697 F.Supp. 1224, 1227 (D.D.C.1988).

The claim of negligence in this case, however, presupposes an ongoing duty of reasonable care (i.e., that the broker has obligations between transactions). But in establishing a nondiscretionary account, the parties ordinarily agree and understand that the broker has narrowly defined duties that begin and end with each transaction. We are aware of no authority for the view that, in the ordinary case, a broker may be held to an open-ended duty of reasonable care, to a nondiscretionary client, that would encompass anything more than limited transaction-by-transaction duties. Thus, in the ordinary nondis-cretionary account, the broker’s failure to offer information and advice between transactions cannot constitute negligence.

All of the cases relied on by Kwiatkow-ski in which brokers have been found liable for their nondiscretionary customers’ trading losses involve one or more of the following: unauthorized measures concerning the customer’s account (i.e., the account became discretionary-in-fact because the broker effectively assumed control of it); failure to give information material to a particular transaction; violation of a federal or industry rule concerning risk disclosure upon the opening of the account; or advice that was unsound, reckless, ill-formed, or otherwise defective when given. See, e.g., Conway, 16 F.3d at 510 (broker liable where he liquidated part of nondiscretionary account in order to satisfy margin call without ' obtaining client’s authorization, where client never received notification that margin requirement had changed); Vucinich, 803 F.2d at 459-61 (vacating directed verdict for broker where evidence showed broker may have violated Securities Exchange Act by failing to disclose material facts relating to risk to his unsophisticated client, disregarded client’s clearly-stated wish to avoid speculative trades, and may effectively have exercised control over the account); Lehman Bros. Commercial Corp. v. Minmetals Int’l Non-Ferrous Metals Trading Co., No. 94 Civ. 8301, 2000 WL 1702039, at *26-*28 (S.D.N.Y. Nov.13, 2000) (denying summary judgment for broker on breach of fiduciary duty claim, ruling that issues of fact existed concerning the “true nature of the relationship” between the parties); Dime Sav. Bank, 886 F.Supp. at 1080-81 (negligence verdict upheld where broker failed to evaluate client’s financial situation before opening margin account, in violation of “suitability rule” of the National Association of Securities Dealers); Cheng, 697 F.Supp. at 1227 (negligence claim was adequately stated where it was based on broker’s alleged failure to comply with NASD suitability rule).

Kwiatkowski does not claim any unauthorized trading, any omission of information material to a particular transaction, any violation of government or industry regulations concerning risk disclosures at the time he opened his account, or (except for Schoenthal’s advice that he not liquidate on Friday, March 3, 1995) any unsound or reckless advice. Indeed (with that exception, discussed infra), Kwiatkow-ski is in no position to complain about any of these things. He can hardly contend that Bear negligently induced his speculations in the dollar (Kwiatkowski m