Unsuitability Loss Lawyers

What Does It Mean To Sue A Broker For Unsuitability? 

Our Trusted Unsuitability Loss Lawyers Are Here To Help 

At Shepherd Smith Edwards and Kantas (investorlawyers.com), we represent investors who have been the victim of unsuitable investment recommendations by their broker or investment adviser.  Unfortunately, unsuitability is one of the most common causes of investor losses that end up meriting a lawsuit for damages against a financial advisor and/or their firm.

What Is Unsuitability? 

Financial Industry Regulatory Authority Rule 2111 mandates that a firm or associated person have reasonable grounds for believing a financial product, a security, an investment strategy, or a transaction is suitable for an investor before making the recommendation.

Determining suitability involves looking at a number of factors, such as the customer’s age to assess what stage they are in life, their income, net worth, liquidity, time horizon in terms of their goals, tax situation, risk tolerance level, the makeup of their portfolio, financial goals, and other key factors. The financial advisor should also have a solid understanding of what they are recommending and any of the risks to be able to make a proper assessment of suitability.

Suitability will vary for each investor, their situation, and their needs. The danger with making an unsuitable investment recommendation to an investor is that serious losses can result, especially if they lack the risk tolerance level needed for a high-risk investing strategy or an alternative investment that is easily influenced by the ups and downs of the market.

Unfortunately, we have found that unsuitability can occur when a financial advisor decides to go for the riskier product that will pay them the higher commissions rather than making sure that an investment recommendation is being made that is in the customer’s best interests.

It should also be noted that while unsuitability is usually the cornerstone of the majority of investment loss recovery claims, this does not happen in a vacuum. Most investor lawsuits will cite other grounds as well, such as misrepresentations and omission, concentration, selling away, failure to supervise, negligence, or breach of fiduciary duty—all of which can be connected to unsuitability.

The bottom line is if a broker’s investment recommendation is inappropriate for an investor, then it is an unsuitable recommendation. For example, what may be a safe, proper recommendation for a young, accredited investor may be too risky for an elderly senior with a low risk tolerance level and no income coming in. However, it is important to note that even wealthy, sophisticated investors can fall victim to unsuitable investment recommendations that can result in serious losses.

Why Contact Our Knowledgeable Unsuitability Attorneys?

Shepherd Smith Edwards and Kantas have been representing investors for more than 30 years. Our team of seasoned lawyers, legal assistants, and consultants have over a century’s worth of collective experience in securities law and the securities industry. We know how to identify when unsuitability has played a part and when your losses warrant pursuing damages from your broker and their firm.

We have represented thousands of investors in arbitration, mediation, and litigation. More than 90% of our clients have received full or partial financial recovery through our skilled efforts and dedication.

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