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If you are a New York investor who sustained serious losses because of a failure to diversify in your brokerage account by your financial advisor, you may be able to pursue damages for overconcentration.
At Shepherd Smith Edwards and Kantas our New York Overconcentration Attorneys (investorlawyers.com) represent clients throughout the Empire State with investment loss recovery claims against broker-dealers. Contact our Buffalo, NY securities law office to schedule your free, no obligation case assessment.
Because we work on a contingency basis, you will only pay for our securities law services if we obtain financial recovery for you. A New York excessive concentration lawsuit is not one you want to pursue without trusted Buffalo investor attorneys fighting for you.
Why Does Overconcentration Pose A Huge Risk of Loss for Many New York Investors?
Unless you are a sophisticated and accredited investor that has a solid grasp of the risks that can arise, excessively concentrating your account with one investment, asset class, or financial products in the same industry is likely too risky of a strategy for you.
Overconcentration is what happens when your brokerage account is not properly diversified with the appropriate balance of different kinds of investments, This can offset losses that may arise should one of the investments prove fraudulent or an entire industry fails.
Excessive concentration can increase the risk of amplified losses. It can occur in an New York investor’s account in different ways:
Intentional concentration: This is a specific strategy employed by the investor who is willing to tolerate the risks, usually because there is a chance of higher gains.
Deliberate concentration is only suitable for experienced investors. If you are a retail or novice investor, it would generally be bad investing advice for your broker to recommend that you overconcentrate your portfolio.
Asset performance-related concentration: Maybe your portfolio was diversified at one point, but then one of the investments ended up performing a lot better than the rest. This can cause your account to become overconcentrated, which is why your financial advisor should regularly review your portfolio to see if any changes to your allocations need to be made.
Company stock concentration: When an employee concentrates their retirement money in their employer’s stock.
Correlated asset-related concentration: Having too many investments that belong to the same industry or are the same kind of security—even if they are different investments—can lead to high correlation.
This means that what impacts one of the investments is likely to impact the others. For example, having too many stocks in different technology companies or funds could prove problematic if the tech industry were to get into trouble, which it has in the past.
Illiquid concentration: Having an account with too many investments that are illiquid could be an issue, because usually these investments can prove difficult, even impossible, to resell should you need to access funds. Most alternative investments, such as non-traded real estate investment trusts (non-traded REITs), Delaware Statutory Trusts (DSTs), Regulation D offerings, and private placements, are illiquid investments.
A few examples of overconcentration in an investor’s portfolio:
- The account is too heavily allocated with stocks from the oil and gas industry.
- There are different investment funds in the portfolio, but they have underlying assets that overlap.
- An investor’s account is holding too many private placements.
Representing New York Overconcentration Investor For 35 Years
For decades, Shepherd Smith Edwards and Kantas has been fighting for NY investors to recoup their losses caused by excessive concentration and other kinds of broker misconduct or negligence. We have the experience, skills, and resources to take on even the largest Wall Street firms.
Our Buffalo, NY failure to diversify attorneys have helped thousands of investors to collectively recoup many millions of dollars settlements and awards. We represent investors in arbitration, mediation, and litigation.
Contact our Buffalo Securities Law Office Today:
Call our New York Overconcentration Attorneys at(716) 261-3529 or (800) 259-9010 or fill out this online form.
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6225 Sheridan Dr #308-B
Buffalo, NY 14221