The COVID-19 pandemic has put the United States in a health and economic crisis. When the US was beginning to realize that the coronavirus was much more serious than originally thought, the stock market did not move very much – at first. However, that all changed when stay at home and quarantine orders went into place. Millions of people have lost their jobs and the stock market took a major hit, and most major indices fell by more than 30% from all-time highs set in February. The indices have bounced back from their lows at this point.
Are Stock Market Losses Compensable?
It is important to understand that investing in equities does come with a certain amount of risk. All of the major indices will go up and down regularly, depending on events that take place in the US and around the world. However, there are times with some investors are be able to recover compensation through an arbitration claim with the Financial Industry Regulatory Agency (FINRA), if losses they suffered are the result of misconduct by their financial advisor.
A skilled FINRA abritration attorney experienced in this area of law can help victims if they have been taken advantage of by stockbroker misconduct or investment fraud. It is important for all investors to understand that investment professionals and stockbrokers have a duty to make suitable recommendations to investors that are consistent with the true objectives and risk tolerance for the investor. Failure to do so could result in both the investment professional as well as financial institutions being held liable for damages.
Who Has Faced Significant Investment Losses During the COVID-19 Crisis?
The investors who have been hardest hit are those who were recommended risky investment strategies by their financial advisors or stockbrokers.
This includes those who have taken part in the UBS Yield Enhancement Strategy (YES) or other yield enhancement strategies. Those who were recommended YES-type strategies likely suffered significant losses in just a matter of weeks when they COVID-19 pandemic began affecting our economy. Unfortunately, many investors were pitched YES strategies as low-risk or neutral investment options, when, in fact, these strategies laid them open to substantial losses.
Many investors were also advised to invest heavily in certain sectors of the economy (including oil, gas, and energy). Some investment advisors led investors into and over-concentration of these sectors, which has likely led to substantial losses since the COVID-19 pandemic began.
Other investors who may have experienced substantial losses over this time period include those who followed advice to invest in:
- Structured notes such as autocallables and tellable yield notes
- Concentrated positions in oil and gas sectors
- Real estate investment trusts (REITS)
- Mortgage-based securities
- Private equity
- Private placements
- Business development companies
What Can Investors Do Now to Recover Losses From the COVID-19 Stock Market Crash?
If you have suffered losses as a result of your banker, stockbroker, or investment advisor’s negligence or intentional wrongdoing, you need to seek assistance from a skilled attorney today. You may be able to recover damages through Financial Industry Regulatory Agency (FINRA) arbitration. Financial institutions can and should be held accountable for making unsuitable recommendations, over-concentrating their clients’ portfolios, and failing to disclose risks. At Meyer Wilson, our experienced investment fraud lawyers are ready to help you get through this today. You can contact us by calling (800) 738-1960 or contact us online to speak confidentially with an attorney today.