Shingle Theory Law and Legal Definition
In securities law, the shingle theory refers to the principle that brokers/dealers must be held to a high standard of conduct due to their act of engaging in the securities business ('hanging out a shingle'). Brokers and Dealers implicitly represent to the world that the conduct of all their employees will be fair and meet professional norms. This doctrine was first introduced by the Securities and Exchange Commission in the 1930s and was later affirmed by the courts. The idea is that a broker who hangs out a shingle should represent his/her customers fairly and responsibly when making suggestions regarding securities. By being in the securities business and by soliciting customers, a broker/dealer makes an implied representation of fair dealing.
