Especially in a time when the market is volatile, and both investors and financial advisors are scrambling to protect their investment, the door opens wide for investment misconduct. In times of trouble, the likelihood that a broker will make an unsuitable investment recommendation increases dramatically. When your broker recommends an investment, you trust him or her to choose investments that are suitable for you and your financial situation.
A couple of examples of suitability can be the following:
- The broker has researched the investment, understands how it works and who is involved, and decides that the opportunity is solid enough to recommend based on your circumstances. For example, a confusing structured product is generally not suitable.
- The broker has researched the financial product, understands it, and feels that it is appropriate for you, your risk tolerance, and your financial goals—for example, a volatile stock that has great potential may not be suitable for a retiree trying to protect a "nest egg," even though it may be suitable for another investor with better risk tolerance.
You broker should look at any investment in light of your needs before recommending it. If your broker fails to research the product, offers a product to you that doesn't match your financial needs, or recommends an investment for which he receives an incentive without considering if it is right for you, then you may have an unsuitability claim. If you suspect your broker made an unsuitable investment recommendation, you may have one of the following claims:
- Breach of fiduciary duty
It can be a fine line, and even if a firm's agreement doesn't say a fiduciary duty is owed, the circumstances may dictate otherwise. If you are pursuing a suitability claim, it is highly recommended that you contact an experienced investment misconduct attorney who can examine your specific case and explain your options for recovery.