Just as a falling tide can reveal shipwrecks, a falling market can reveal financial industry abuses of investors. Thus, while certain recent investor losses may be attributable to market conditions, many recent losses are attributable to Wall Street’s excesses and failures to provide the professional services promised.
As a result, investor lawsuits rose 19% in 2008 in the wake of the worst bear market since the 1930s, reported Matt Krantz in the January 7th edition of USA Today. Recent surveys reveal that many investors are unhappy with their brokers and investment advisors after having received reports of significant losses. Affluent investors are especially outraged. Nearly two-thirds of U. S. millionaires believe their investment advisors provided poor investment management and advice, according to Spectrem Group, a Chicago-based research and consulting firm.
While investors might experience some losses during a market downturn, often times their losses are unnecessarily magnified by the improper handling of their accounts by brokers or investment advisors. All too frequently, brokers and investment advisors recommend and implement unsuitable investments and investment strategies, which expose their clients to extraordinary risk and losses. Similarly, brokers and financial advisers often omit to advise their clients of specific risks that are associated with the investments being recommended.
“We have certainly seen and continue to see a huge surge in investor claims,” said J. Boyd Page, Senior Partner of Page Perry. “Of course, not all investors who lost money have compensable claims,” added Mr. Page, “but in many cases, we find that misconduct of a broker or investment advisor caused the investor to incur a greater loss than he or she otherwise would have incurred.”
Brokers and investment advisors are required by law not to recommend an investment or investment strategy that is unsuitable or inappropriate based on the investor’s investment objectives and risk tolerance. Investment advice must provide proper asset allocation (the mix of stocks, bonds and cash) and diversification (the avoidance of over-concentration of investments in one or more sectors of the economy). Brokers and investment advisors are also required by law to fully disclose all the significant risks associated with each particular investment and investment strategy.
Questions to ask yourself include: Did my advisor recommend an appropriate allocation of stocks, bonds and cash? Within each such asset class, did my advisor recommend an appropriate diversification so that my stocks, for example, were not overly concentrated in one or a few sectors of the economy? Did my advisor carefully inquire into my risk tolerance fully discuss the risks of his or her recommendations prior to my investing? Did my advisor provide me with reasonable disclosure of the specific risks of my investments? Brokers and financial advisors can be compelled to compensate investors for losses caused by their failure to meet such legal duties.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions, and have aided clients who have been the victims of financial adviser abuse and scams. Page Perry’s attorneys are actively involved in counseling institutional and individual investors regarding their investment problems. For further information, please contact us.