Kentucky Unsuitability Law Firm

Kentucky Unsuitability Law Firm Represents Bluegrass State Investors Who Are The Victims of Broker Misconduct

At Shepherd Smith Edwards and Kantas (investorlawers.com), we help Kentucky investors pursue damages from the broker-dealers and investment advisers that made unsuitable investment recommendations to them.

Any recommendation that is not a good fit, given a customer’s investing profile, is an unsuitable recommendation that can lead to serious losses. To schedule your free, no obligation case assessment, contact our Lexington, KY securities law office today.

Why Are Unsuitable Recommendations Harmful to Kentucky Investors?

An investment recommendation that is unsuitable for an investor—whether the recommendation is a particular product, trade, or strategy—can make them vulnerable to unnecessary risks that:

The customer’s portfolio and assets cannot tolerate.
May lead to the customer missing out on the right investment opportunities if only their financial advisor had made a proper recommendation.
Can overconcentration an investor’s account, causing excessive exposure to one particular stock, asset class, or industry.
Force the customer to pay higher fees and commissions.
It could expose them to investment fraud.
Causes serious portfolio losses that might otherwise have been avoided.

Unfortunately, unsuitability by financial advisors happens. There are brokers out there that might try to sell a customer a too risky alternative investment or employ an inappropriate, volatile trading strategy out of ignorance, or on purpose—perhaps even to generate higher commissions for themselves while at your expense.

Unsuitability is one of the most common reasons that Kentucky investors end up suing their broker-dealers for damages, despite the fact that the Financial Industry Regulatory Authority (FINRA) has Rule 2111 and its suitability requirements. The rule stipulates that before making an investment-related recommendation, a financial advisor must have:

Reasonable grounds: There must be reasonable cause for thinking that a recommendation is a suitable one for at least some investors. This conclusion will have been reached following proper due diligence.

Customer-specific suitability: The broker has determined, based on the investment profile of the customer, that the investment recommendation they are making is suitable.

Quantitative suitability: There are reasonable grounds for thinking that a series of transactions, when examined in totality, is appropriate for the customer, given their investment profile.

How SEC Regulation Best Interest Impacts Suitability

There is also the US Securities and Exchange Commission’s (SEC’s) Regulation Best Interest (Reg BI), which impacts the suitability standard that brokerage firms are required to abide by. Reg BI makes it clear that broker-dealers and their registered representatives must prioritize the customer’s best interests over their own.

To do this, financial advisors must understand the recommendation they are making—including its possible risks, rewards, and costs—consider the specific retail investor’s profile, assess alternatives that may be less risky or not as costly for the customer, refrain from excessive trading in the account, and provide the customer with any full and fair disclosures necessary, including any potential conflicts of interest.

Unsuitability and Institutional Investors

Retail investors, retirees, unsophisticated investors, accredited investors, high-net-worth investors, and institutional investors can all fall victim to unsuitability and end up losing money as a result. However, with institutional investors, the suitability obligation that broker-dealers owe them is slightly different; there is an assumption that they are generally sophisticated and experienced investors.

A broker must have reasonable grounds for thinking the institutional investor has the ability to independently assess the risks of the investment they are taking on.

While proving unsuitability if you are an institutional investor who has suffered losses can be even tougher, that doesn’t mean it is not impossible. But it is one of the many reasons why you want to hire seasoned Lexington, KY unsuitability loss lawyers to fight for you.

Why Hire Our Lexington, Kentucky Unsuitability Law Firm?

The Shepherd Smith Edwards and Kantas Kentucky Unsuitability Law Firm has been representing Kentucky investors for 35 years. We have helped thousands of investors to collectively recoup many millions of dollars in arbitration, mediation, and litigation. More than 90% of our clients have secured full or partial financial recovery.

We are committed to helping to make investors financially whole again while holding broker-dealers and investment advisers liable for unsuitability. We are dedicated to protecting investors of all levels of investing experience and net worth while ensuring their right to financial recovery.

Contact Us Today:

Call (866) 931-7628 or (800) 259-9010 or fill out this online contact form, and someone from our Lexington securities firm will get back to you.

Our Kentucky Unsuitability Law Office:

216 E Reynolds Rd #C
Lexington, KY 40517