Unsuitable Securities Recommendation

Alabama, Georgia, Florida

Suitable for you?
When your broker recommends an investment, it must be in your best interest and align with your financial goals. The National Association of Securities Dealers (NASD) has established certain standards under the "know your customer" rule. This means it is the broker's responsibility to consider your financial condition, comfortable risk level and investment goals to determine what securities are best suited for you.

However, there is little incentive for your broker to conduct this research, and often times this essential step is incomplete. If you broker does not learn anything about your financial objectives, he or she cannot fulfill this responsibility. Your broker might then make recommendations to satisfy his or her own benefit; basing trades on the commissions each produces.

Unsuitable recommendations aren't always the result of stockbroker fraud. In some instances, the broker is simply incompetent. But if you incur losses, he or she can still be held accountable.

Red Flags
Investments may be deemed unsuitable if you don't have the financial ability to incur the risk or are outside of your financial goals. Also, if you were unaware of the risks associated with certain types of investments, those investments could be considered unsuitable for you.

Other common characteristics of unsuitable investments include:

• Illiquidity-if you're told to invest a significant portion of assets in illiquid investments with no ready market, or that have a substantial penalties for early redemption.
• over concentration-if you're told to invest a large portion of assets into a single stock, this exposes you to a high risk of loss.
• Tax Insensitive Investments-if you need to minimize your taxes and you're told to put money into investments that generate large, unnecessary tax liabilities.
• Double tax exemptions-if you're told to invest money free of income taxation on gains (like money in an IRA) into tax-free bonds. This is generally unsuitable because you don't need a tax-free investment, and it doesn't yield as much as other investments.

Is Your Broker too pushy?
Sometimes, your stockbroker could try to convince you to purchase a certain stock that is being aggressively marketed by the brokerage firm. Your broker might misrepresent the facts about the investment's quality. Also, if your broker recommends or invests your money in penny stocks or junk bonds, as these are suited mainly for high-risk investors, they may not be appropriate for all investors. If your financial objectives differ from any type of investment your broker solicited and transacted for you, this can also be the basis for an unsuitable recommendation claim.

If you or a loved one has lost money and you believe your broker made an unsuitable recommendation, please contact the unsuitable investment attorneys Burke, Harvey & Frankowski today. Serving the people of Florida, Georgia and Alabama, we can help you reclaim the money you deserve. Call or e-mail us today for a free consultation.

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