Justia Lawyer Rating
Super Lawyers - Rising Stars
Super Lawyers
Texas Bar Today Top 10 Blog Post
Lawyers Of Distinction 2018
Avvo Rating. Samuel Edwards. Top Attorney

Unsuitability

Simply put, a recommendation is unsuitable if it is inappropriate for an investor. In an over-simplistic example, recommending a penny stock to an elderly retired widow would be deemed unsuitable. However, unsuitability determinations are always more nuanced, and apply to all ages, risk tolerances, financial abilities and experiences. Unsuitability can also apply to the wealthy. In a recent matter involving a wealthy physician, the broker utilized margin to purchase securities, which increases risk, and also recommended leveraged mutual funds that were aggressive in nature. The portfolio was simply not sustainable. It would have been unsuitable for anyone. As was to be expected, a minor downturn in the market caused the entire portfolio to implode.

Unsuitability can be about a specific transaction, but generally the concept is applied to a portfolio’s composition and/or strategy. Unsuitability can also be applied to a product. Examples involve concentration, margin/credit line usage and excessive transactions and/or mark-ups. In one particular instance, a broker recommended a portfolio which consisted of close to 50% exposure to financial stocks. Such a recommendation was extremely unsuitable regardless of risk tolerances and financial wherewithal of the client. When financial stocks plummeted, the portfolio was decimated. In another situation, a financial advisor failed to perform proper due diligence on a mutual fund and recommended the fund based on his beliefs about the fund’s safety and lack of fluctuation. By neglecting due diligence efforts, the advisor misrepresented the product which equated to an unsuitable recommendation

Client Reviews
★★★★★
"I am going to miss conversations with you, Sam Edwards. You’ve been a wonderful lawyer and a friend. I loved learning legal jargon from you. But, even more, it is your self respect and commitment to your position that I admire and your persistent patience-your equanimity. With great appreciation, thank you!" M.B.
★★★★★
"My experience with Ryan Cook has been very positive. Through every step of the litigation he explained what to expect to happen. When I spoke with him later he reviewed the process. He was very patient and I never felt rushed. I have already told friends how wonderful he is." L.R.
Contact Us
  1. 1 Free Consultation
  2. 2 No Recovery, No Fee
  3. 3 Over 100 Years Experience

Fill out the contact form or call us at (800) 259-9010 to schedule your free consultation.