Broker Misconduct Lawyers

Tesla, Nvidia, Amazon, and Other “Magnificent Seven” Stocks Track Worst Performances. Our Broker Misconduct Lawyers Are Exploring Whether Unsuitable Recommendations of Tech Stocks May Have Led To Overconcentration, Margin Abuse

Shepherd Smith Edwards and Kantas (investorlawyers.com) are closely monitoring the markets at this time to determine whether investors whose brokers heavily invested them in “Magnificent 7” stocks may have grounds for an investment loss recovery claim.

Following two years of leading stocks’ rallies, the largest technology companies—Amazon (AMZN), Alphabet (GOOGL, GOOG), Tesla (TSLA), Microsoft (MSFT), and Meta (META)—are underperforming and leading the major indexes downward. Apple is also down.

On Yahoo! Finance, Goldman Sachs chief US equity strategist David Kostin talked about how “more than half of the S & P 500’s drawdown” could be attributed to the drop in these seven market leaders. Tesla’s shares alone have declined over 40% since January.

What Do Magnificent Stock Drops Have To Do With Broker Fraud?

Our broker concentration attorneys are investigating whether financial advisors may have overconcentrated customers in any of these stocks or even the entire tech sector. Excessive concentration is a serious problem. It can lead to significant portfolio losses especially if an investor’s portfolio isn’t properly diversified with other investments that can offset a “worst performance” in one particular industry.

Shepherd Smith Edwards and Kantas Broker Misconduct Lawyers are also looking into whether financial advisors encouraged customers to open up margin accounts that would have allowed them to borrow money from the brokerage firms in order to buy even more of these stocks.

While a margin account can increase the returns—notwithstanding the high rates charged by the broker-dealer for the duration that such a loan is outstanding—if the securities purchased drop in value, the investor could end up sustaining huge losses if the margin account’s equity plunges in value under the maintenance margin level.

The latter could compel a brokerage firm to make a margin call in which the investor has to either deposit more funds or sell stock to offset part or all of the difference between the maintenance margin and the security price. A margin blowout, in which account positions have to be sold to fulfill margin calls, can end up being grounds for suing your broker if an investor wasn’t notified of the risks or told they had more time to meet any requirements.

It doesn’t help that certain Magnificent Seven stocks—Nividia, for instance—are under scrutiny for alleged securities fraud. The artificial intelligence chipmaker was sued for purportedly misleading investors about how much of its sales are tied to the cryptocurrency market. Meta too has faced securities fraud allegations.

All of these concerns should be factored in by brokers who choose to recommend any investment to a customer. Unfortunately, there are brokerage firms that will seek to avail of the high commissions and fees they can earn from hot stocks, which can lead to due diligence failures, breach of fiduciary duty, unsuitable recommendations, concentration, too risky investment strategies, and more.

Why Work With Our Skilled Broker Misconduct Lawyers?

Shepherd Smith Edwards and Kantas Broker Misconduct Lawyers have been fighting for investors for over 30 years. We have represented clients in more than 1000 matters in arbitration, mediation, negotiation, and litigation. Our securities law firm has collectively secured many millions of dollars in awards and settlements for thousands of investors.

We know how to maximize an investor’s chances for a full financial recovery and have the skills, resources, and experience to handle even the most complex kinds of cases. More than 90% of our clients have received full or partial financial recovery.

Call (800) 259-9010 or fill out this form to schedule your free, initial case consultation.