Unsuitable investments can leave investors exposed to serious risks and losses. At the Investment Loss Recovery Group, we’re former licensed securities brokers and defense attorneys for major Wall Street broker dealer firms, and we understand when investment strategies are suitable and when they’re not. We’ve worked with government regulators, brokers, and firms to recover when investors are harmed by unsuitable investments.
Our experienced attorneys have almost 40 years of combined experience dealing with investments and investment strategies. We understand the challenges that investors face both in investing their money and recovering it when they’ve been harmed. With our experience and resources, we concentrate on helping investors investigate their claims and recover their losses.
If you’ve unjustly lost money due to unsuitable investments, contact us today for a free consultation. We are ready to review your situation and discuss your options for recovery.
What Are Unsuitable Investments?
Unsuitable investments are investments that do not match an investor’s goals, objectives, risk tolerance and other circumstances. Characteristics such as the investor’s wishes, age, financial resources, sophistication, and experience are all involved in determining whether an investment is unsuitable. What is suitable for one type of investor may be completely inappropriate for another.
How Is Unsuitability Determined?
The determination of whether an investment is suitable or unsuitable depends heavily on the facts of the investor, their wishes, and their situation.
Brokers and firms are required by the Financial Industry Regulatory Authority (FINRA) to do reasonable diligence to obtain key information about an investor before offering investment opportunities. This information includes:
[one_half]
- Age
- Tax status
- Liquidity needs
[/one_half]
[one_half]
- Time horizon for returns
- Risk tolerance
- Other types of information
[/one_half]
It can be challenging to determine whether an investment is suitable, but investigators will look at the information above, broker communications and prior knowledge to understand the suitability of an investment. For example, an investor with little experience wants safe investments that are low-risk. Investment in short-term, high-volatility securities could be unsuitable for them. Another example could be a sophisticated investor who wants to take investment risks. If a broker invests their money in long-term securities that lock the money away, it could be unsuitable.
Suitability of an investment largely depends on the information that broker has about an investor. In cases where an investor conceals or refuses to release information, the broker is not allowed to make assumptions but must instead look at the totality of available information in the situation. Brokers and firms may offer advice and opportunities only if there is enough information to evaluate the investor’s situation properly.
Once brokers and firms have the information they need, they’re required to analyze it. This helps ensure the investment opportunities and strategies line up with the investor’s needs. If brokers and firms fail to gather sufficient information or perform proper analysis, they may be held liable.
How Can Unsuitability Harm an Investor?
Unsuitable investments may create too much risk, lock up assets for too long of a time, provide unacceptable levels of return, or generate losses that can drain an investor’s finances.
Investors rely on brokers and firms to provide honest and thoughtful analysis of investment opportunities that are appropriate for their goals and circumstances. When brokers and firms fail to do this, investors may be left with significant losses they couldn’t see coming.
How Can Investors Protect Themselves Against Unsuitable Investments?
- Provide clear information to your broker and brokerage firm. In most cases, brokers and firms want to help investors grow. They’ll ask for many different types of information, and they’ll try to develop a clear picture of what you’re looking from your investments. When you give them clear and concise information about your situation and what you want, this helps them develop a comprehensive and useful strategy for your investments.
- Ask questions. Investing can be confusing for newcomers and even for those with experience. Don’t be afraid to ask questions about any proposed strategies or investment opportunities. If you’re uncomfortable with the answers, you have control over your money. Don’t invest if the strategy a broker proposes doesn’t match with your situation or goals.
- Monitor your investments. Vigilance will help you protect yourself and your investments against problems. If you notice a transaction that seems suspicious or out of character for your portfolio, don’t hesitate to contact your broker or seek outside help. If a broker or firm is acting illegally or unethically, it’s important to catch this behavior as soon as you can. Don’t assume that just because your broker is making a transaction on your behalf that it’s the right one to make.
- Contact a lawyer. Investments can be confusing, and the question of suitability can take time to answer. A lawyer can help you understand whether your broker has acted responsibly in their recommendations. It’s important for your investments to match with your situation and your goals. If you think that your broker or brokerage firm has recommended unsuitable investments, our attorneys can help you figure out your next steps.
It can be difficult to know if an investment opportunity or strategy is suitable for you. In many cases, there is no perfect answer for whether an investment is right. Regardless of the investment, know that you have options and help is only a call away.
Unsuitable Investments Can Hurt You. We Can Help.
The Investment Loss Recovery Group knows how broker and firm failures can lead to unsuitable investments. We’ve handled every aspect of unsuitable investment claims, and we have the knowledge to help you. If you’ve lost money or ended up with investments you didn’t want, we can help you investigate and recover your loss.
The Investment Loss Recovery Group has the knowledge and experience you help you move forward. As former licensed securities brokers and defense lawyers, we understand the rules and regulations that govern brokers and firms. We know how they operate and we know how to protect you.
If you have been harmed by unsuitable investment opportunities or strategies, contact us today for a free consultation. We can help.