Over-Concentration is Unsuitable for Retirees
Do you have concerns over the impact of unsuitable investment recommendations from your Broker or Brokerage firm on your investment or retirement portfolios? Recently, regional banks Silicon Valley Bank, First Republic and Signature Bank have failed or were sold to prevent failure. Many investors lost most, if not all of their investments in these banks as a result. Did your broker recommend an over-concentration of these securities in your account? If so, you may have a claim for loss recovery from your brokerage firm. Recovery is most likely if these securities represented a large, over-concentrated position in your portfolio.
Recently, brokers have made unsuitable recommendations of an option strategy combined with margin account borrowing. In this strategy, the broker recommends that the investor incur margin debt to buy securities and write covered calls. Since this strategy involves leverage (borrowed money) it is dangerous and volatile and unsuitable for most investors. If your broker has recommended margin and or options, and you have suffered losses, those losses may be recoverable in a FINRA arbitration.
Over-concentration in one sector can be an unsuitable recommendation from your broker. This is particularly true in riskier sectors, like tech, oil and gas, and biotech. Stocks like Amazon, Facebook, Tesla and Snap, while popular names, are volatile stocks. If you have an over-concentration of these securities that were recommended by your broker, there may be a path to loss recovery.
Free Case Evaluation
The Mark Tepper Law Firm is offering retirees and investors a FREE CASE EVALUATION to determine if your broker’s recommendations were unsuitable for your investment and retirement needs. To start the process, send an email to Attorney Mark A. Tepper at askmark@marktepper.com, or telephone him at 954-704-2310.
FINRA Rules on Suitability
FINRA (the Financial Industry Regulatory Authority) has warned investors about the risks associated with over-concentration of securities and the use of margin and options strategies, which can lead to significant losses.
FINRA Rule 2111 requires brokerage firms to ensure that recommended investments or investment strategies are suitable for their clients based on their investment profile. Over-concentration in one sector can be an unsuitable allocation, and brokerage firms should consider their clients’ overall portfolio risk to avoid this situation.
FINRA has issued Investor Alerts warning investors about the risks associated with using margin and over-concentration. These alerts emphasize that margin trading and over-concentration are not suitable for all investors.
The Mark Tepper Law Firm is offering retirees and investors a FREE CASE EVALUATION to determine if your broker’s recommendations were unsuitable for your investment and retirement needs. To start the process, send an email to Attorney Mark A. Tepper at askmark@marktepper.com, or telephone him at 954-704-2310.