San Francisco Unsuitability Attorneys

Our San Francisco Unsuitability Attorneys are Representing Investors Throughout the SF Bay Area and Northern California Against Broker-Dealers

For many investors who decide to hire a financial advisor, it is because they need a professional to help make sound investing choices that are appropriate for them given their investment profile: this may include their financial goals, level of investing experience, age, liquidity needs, tax status, investment objectives, financial situation, the makeup of the rest of their portfolio risk tolerance level, investment time horizon, and more.

Unfortunately, there are brokers that will disregard their obligation to only make suitable investment recommendations to their customers, whether due to ignorance, fraud, negligence,/or the lure of the higher commissions they can earn. This is called unsuitability and is one of the more common causes of unnecessary investment losses.

From our San Francisco securities law office, Shepherd Smith Edwards and Kantas San Francisco Unsuitability Attorneys (investorlawyers.com) represent Northern California investors in recouping their losses because of unsuitable recommendations. Keep in mind that, as with most investor lawsuits, there may be other causes of action as well.

What Is a Broker’s Suitability Obligation to Customers?

Under Financial Industry Regulatory Authority (FINRA) Rule 2111, stockbrokers have three suitability obligations to clients :

1)    The reasonable-basis obligation: There must be reasonable grounds for a broker to believe, after conducting reasonable due diligence, that an investment recommendation is appropriate for at least some investors. The financial advisor must have an understanding of the possible risks and rewards involving the strategy or security being recommended.

2)    The customer-specific obligation: There must be reasonable grounds for a broker to believe the recommendation they are making is appropriate for the particular customer.

3)    Quantitative suitability: There must be a reasonable basis for thinking that a series of recommended transactions won’t become unsuitable and excessive given the customer’s investment profile. Turnover rate, any in-and-out trading, and the cost-equity ratio can be grounds for determining whether this suitability obligation was violated.

There is also the US Securities and Exchange Commission’s (SEC’s)  Regulation Best Interest (Reg BI), which sets a standard of conduct that requires brokerage firms and their associated persons to ensure that any recommendation to a retail customer, whether a securities transaction, investment strategy, or even the type of account to set up, is in the latter’s best interests.

Regarding institutional investors that have an institutional account, there is an exemption when it comes to suitability if the broker-dealer has a reasonable basis for thinking the particular customer has the investing experience necessary to independently assess any risks.

Unlike retail customers, seniors, retirees, and high-net-worth investors, an institutional investor is not a person but an entity that trades large amounts of money for beneficiaries and others. However, that doesn’t mean that institutional investors are exempt from falling victim to unsuitable investment recommendations.

How Can Our San Francisco Unsuitability Attorneys Help?

For 35 years, Shepherd Smith Edwards and Kantas San Francisco Unsuitability Attorneys have been fighting for investors who have fallen victim to unsuitable investment recommendations by their financial advisors.

We know what an unsuitability looks like and how to prove liability, including demonstrating that a broker had a duty to offer you appropriate investing advice, breached that duty to you, and as a result, this directly caused your portfolio losses that now entitle you to damages.

This is not the kind of legal case that you should pursue without trusted San Francisco unsuitability lawyers by your side. It is very important that, rather than approaching your broker-dealer directly to discuss your concerns, you contact us today to request your free, no-obligation case consultation.

Unfortunately, most brokerage firms would rather deny or blame the customer for their losses rather than take responsibility and admit unsuitability. Owning up to broker misconduct or negligence could not only compel them to have to pay you for your losses, but also it may open them up to other customer disputes.

You want to work with a respected Northern California securities law firm that knows how to protect your right to financial recovery and provide you with robust representation in FINRA arbitration, which is where unsuitability claims against broker-dealers are usually made.

Our San Francisco unsuitability law firm has helped thousands of investors to collectively recoup many millions of dollars in arbitration, mediation, and litigation.

Call (415) 287-0877 or (800) 259-9010 or fill out this contact form.

Our San Francisco Unsuitability Attorneys:
1 Embarcadero Ctr #500
San Francisco, CA 94111