Stockbrokers, brokerage firms, and investment advisors have a responsibility to evaluate the needs of their clients, and to determine the level of risk a client is willing to take when it comes to his/her stocks or investments. Investment professionals must be vigilant about assessing the risks their clients will or will not take when it comes to their finances, and then make investment recommendations that the client will be comfortable with and benefit from.
This concept of determining a client’s risk comfort level and investment needs is referred to as “suitability” or unsuitability”. It is a concept that is extremely important for brokers to adapt and adhere to as their clients are placing a great deal of faith into their brokers’ recommendations. It is up to the broker to determine if a client has the financial means and to evaluate the circumstances and risk factors associated with every investment his/her client undertakes. The broker must make it a priority to advise the client to partake in investments that are suitable and to warn the client about investments that may be deemed unsuitable for his/her individual circumstances.
When investment professionals fail to recommend suitable investment options, or when they fail to warn clients about unsuitable investments, they can be held liable for any losses the client incurs. A broker must always provide a “reasonable basis for recommendation” to his/her client. Failure to do so can lead to legal ramifications if the client chooses to seek legal action after incurring losses from unsuitable investments.
The Law Offices of Jonathan W. Evans & Associates is a California based law office assisting clients nationally and worldwide with securities matters. If you have questions regarding suitability or unsuitability, Attorney Jonathan W. Evans can help you. Attorney Evans has significant securities litigation experience and is extremely knowledgeable in this complex area of law. By working with Los Angeles securities lawyer, Jonathan W. Evans, clients can contest their illegitimate losses and ensure that their finances remain secure.
Call The Law Offices of Jonathan W. Evans & Associates today at (800) 699-1881!
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