Suitability Supervision

Securities Fraud Attorneys Representing Clients Nationwide

When you engage the services of a financial broker, it is with the understanding that they will act in your best interests and only recommend investments that are suitable for you. However, the reality is that brokers can often act in their own interests instead of yours, recommending an investment that does not fit with your financial goals to benefit themselves. In fact, there is even a FINRA rule protecting investors from the fraudulent actions of brokers who recommend unsuitable investments to their clients.

When that happens, it can feel like you have no one to turn to. That is why our experienced team of attorneys at Weltz Law specialize in representing investors who have been victims of securities fraud.

Suitability Obligations

This FINRA rule was put in place to ensure ethical sales practices amongst brokers and protect investors. Rule 2111 under FINRA requires brokers to have a “reasonable basis” to believe that a recommended investment product and/or securities strategy is suitable for the client. Suitability is determined based on information the client has provided the broker with through reasonable diligence, and can include the client’s age, financial situation, investment goals, risk index and liquidity needs. Brokers must have a thorough understanding of both the client and the product they are recommending in order to comply with Rule 2111.

Suitability can be further divided into three categories, as explained below.

Reasonable-Basis Suitability

Brokers must have a basis of reasonable diligence to believe that their recommendation is suitable for investors. This means that they must have an understanding of the potential risks as well as rewards of the strategy they are looking to implement.

Customer-Specific Suitability

Brokers must make a detailed analysis of each individual client’s investment profile before deciding whether a particular strategy is suitable for them. An obvious factor to consider is age: clients who are nearing retirement age often have different financial goals from first-time investors just entering the job market. The broker has to analyze each aspect of a client’s profile to support their determination that their recommendation is suitable.

Quantitative Suitability

This aspect of suitability deals with a series of transactions rather than each one in isolation. Brokers who have control over their client’s account need to operate on a reasonable basis that the investment strategy they have recommended, as a whole, aligns with the client’s investment profile. Even if each individual investment seems to work in isolation but misaligns with the client’s goals when all factors come into play, this can be a case of unsuitability.

Meet with a Seasoned Securities Fraud Attorney to Discuss Your Suitability Obligations Case

If you believe that your broker has not complied with their suitability obligations when recommending products and investment plans to you, engage a securities litigation attorney to discuss your case. Our experienced team of attorneys at Weltz Law are based in New York have been assisting investors in FINRA arbitration and litigation for collectively over 30 years.

When you engage our services, you can be assured that our attorneys will advocate tirelessly for any compensation you may be owed for your financial losses. You can call Weltz Law at 877-935-8952, or simply fill in our online form to schedule a meeting regarding your case.