Securities Fraud Lawyers for Suitability Claims

Making suitable recommendations is one of the key parts of a brokers fiduciary duty to a client and compliance with securities laws. Generally speaking, suitability refers to the alignment of a trade recommendation with a clients unique investment profile. A suitable trade would be one that would forward a clients investment goals. Brokers and financial advisors have an obligation to recommend trades that are in their clients best interests; securities firms have a similar obligation to supervise their employees to ensure that suitable trades are recommended and completed.

Napoli Bern Ripka Shkolnik, LLP (NBRS) places a strong focus on suitability claims. Our firm represents investors across the United States who have suffered investment losses caused by unsuitable recommendations. We handle arbitration proceedings with the Financial Industry Regulatory Authority (FINRA) and class action litigation on behalf of wronged investors, seeking to recover the money they lost. Through the years, our securities arbitration attorneys have successfully represented hundreds of investors and have recovered millions on their behalf. We have a track record of more than $3 billion in verdicts and settlements since 2000.

If you would like to learn more about suitability and what steps you can take if youve been affected by unsuitable recommendations, schedule a case review with a legal professional at NBRS. Your initial consultation is free and confidential, and you pay nothing unless we recover money on your behalf. You can also read on to learn more about this important subject.

About FINRA Rule 2111

FINRA Rule 2111 was approved by the Securities and Exchange Commission (SEC) in November 2010 and went into effect on July 9, 2012. This rule retained many of the basic aspects of the previous suitability rule, National Association of Securities Dealers (NASD) Rule 2310, and added some new features. According to a FINRA Regulatory Notice 12-25 Additional Guidance on FINRAs New Suitability Rule :

New FINRA Rule 2111 requires, in part, that a broker-dealer or associated person have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the [firm] or associated person to ascertain the customers investment profile.

What is an unsuitable recommendation?

An unsuitable recommendation is one that does not align with a customers best interests. A broker has an obligation to exercise due diligence in determining what would suit a customers needs based upon his or her investment profile, which may include: risk tolerance level, net worth, income, employment status, age, health, marital status and any other factors that may influence his or her investment goals. A broker must properly research investments to determine whether they may suit a customers needs, before making a recommendation.

There are three main obligations a broker has under FINRA Rule 2111:

• To determine whether the recommendation is suitable for at least some investors, based upon the brokers own research and investigation into the security or investment strategy. The broker should have a solid understanding of the nature of the recommendation, including the potential risks and rewards it may present. This is referred to as reasonable-basis suitability .
• To determine whether a security or strategy is suitable for the particular customer based on the customers investment profile. This is referred to as customer-specific suitability .
• To determine whether a series of recommended securities transactions are not excessive. Rreferred to as quantitative suitability. this rule applies in cases where a broker has control over a customers account.

Investments that are recommended without meeting these requirements may be considered unsuitable. If an investor suffers losses as a result, the broker and brokerage firm may be held accountable. For more information and to see how this may apply to your case, contact a securities fraud attorney at NBRS.