Everything You Should Know About Unsuitable Investment Claims

Violations of the “Know Your Customer” Rule & How They Lead To Unsuitable Investment Claims

Your broker has the obligation to obtain enough information about you and your finances—such as your income and assets—to discuss the appropriate investments. FINRA Rule 2090 (also known as the “Know Your Customer” rule), states that a stockbroker or financial advisor’s number one duty is to make suitable recommendations to his or her customers. Brokers must investigate the investor’s unique needs and ensure that any recommendation is appropriate to their goals and financial situation. A broker’s failure to know the customer and make suitable investment recommendations may be grounds for pursuing a claim for unsuitable investments.

Information that your broker should consider before making an investment recommendation:

  • Your current financial state
  • Why you are investing and what you hope to get out of it
  • Your future financial and situational needs
  • Your tolerance for risk

Brokers not only should take steps to get to know their customers and their investment goals. They should also adequately research the investment before recommending it to you. After careful research, the broker should know whether or not recommending that particular investment to you would be suitable. Also, what is suitable for you now may not be suitable for you in the future, so your broker’s job is to continuously evaluate your needs as well as the state of the investment to ensure it remains in a state of suitability.

Stockbroker Misconduct Cases

The investment advice you receive from your broker should be based on what is most suitable for your current situation and future goals. When brokers fail in their duty to adequately research the investment, or they knowingly and intentionally recommend unsuitable investments, investors can file claims to recover their resulting losses. These types of claims are generally handled through FINRA arbitration.

Enlist the Help of an Investment Fraud Lawyer

The securities arbitration lawyers at Meyer Wilson have represented more than 850 investors and recovered millions of dollars on behalf of their client. They may be able to help you. We are experienced at reviewing and investigating investor claims of unsuitability.

Call us or fill out our online form for your free case evaluation.