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Unsuitability

When you hire a financial advisor, you are hiring someone to use what he or she knows about you and your financial affairs (including your current status and your wants and needs for the future) to make the best, most informed decisions about investments and stock options on your behalf. Not all of us can be constantly up-to-date with the ever-changing financial world, as security fraud lawyers in San Mateo County know, and most people do not have the time or skills necessary to achieve high dollar results from investments. A financial advisor or brokerage firm can help you increase your wealth and wisely manage your money, but only when they act in your best interest.

Financial investment companies are required to keep records of their clients’ financial information, including their incomes and net worth. Usually, this information is collected as part of the client’s incoming account application. In this application, an advisor will categorize a customer and his or her investment objectives using the following umbrella categories:

  • Conservative – Income
  • Moderate – Income & Growth, or Moderate – Growth
  • Aggressive – Growth, or Aggressive – Speculation

The category assigned to a client corresponds to the type of investments and securities that will most benefit the client and help achieve his or her financial goals. Whenever a client’s information or financial status changes, an advisor is supposed to update the files accordingly. If this information is not recorded or updated, or if an advisor knowingly selects the wrong investment objectives and categories, suitability becomes a problem.

Unsuitable Recommendations

The Financial Industry Regulation Authority (FINRA) has instituted the rules that make up the Suitability Standard for Recommendations, known as the Suitability Rule. This rule states that “In recommending to a customer the purchase, sale, or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings as to his financial situation and needs.”

At the Evans Law Firm, Inc., our San Mateo securities fraud attorneys see a lot of claims involving unsuitable investments made on a person’s behalf. Before recommending a particular investment or securities option, your financial advisor has a responsibility to make a reasonable inquiry into your financial standing, including your current income, status, tax information and your investment objectives. Any recommendation that an advisor makes should be in line with your wider financial lifestyle. An unsuitable investment is one that does not fit in with a client’s financial status and goals. If an advisor recommends an unsuitable investment to a client, and the client acts on that recommendation and loses money, the advisor or the investment firm could be liable.

If you believe you have been a victim of unsuitable recommendations from your financial advisor or of any other type of securities or investment fraud, you need the help of a securities fraud attorney in San Mateo County. Your financial advisor has a direct influence over your future and your financial wellbeing, and if he or she has acted in a way to put that in jeopardy, you need to take action to protect yourself. To discuss your case, contact the Evans Law Firm, Inc. by phone at 415.444.8669 or online at www.evanslaw.com today.

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