Unsuitability

Each broker and brokerage firm is required to recommend only suitable investments consistent with the customer's risk tolerance and investment objectives. A broker is obligated under securities-industry rules to "know his customer" and recommend investments that make sense in light of the customer's complete financial picture.

An investment recommended by a broker is often unsuitable when inconsistent with the customer's willingness or ability to take risk or if the investment does not further the customer's investment goals.

What is suitable for one investor may be unsuitable for another. For example, an elderly person who is long retired, has limited assets, and is living on a fixed income, often is not willing or able to afford the possible losses associated with more risky investments. In contrast, a younger person with many working years left probably will have a different willingness and ability to take on risk and will have different investment objectives.

Brokers are also obligated to make sure that there is a reasonable basis to make an investment recommendation. What is reasonable for one person may be grossly unreasonable for another. It depends on the financial circumstances of the particular customer. This is why it is so important for the broker to stay current on the customer's financial situation, including any changes in circumstances, so that the broker upholds his continuing duty to know his customer and to make only suitable recommendations.

If you would like a free case evaluation on your case against a broker who recommended unsuitable investments, please contact the Palm Beach, Florida securities attorneys at McCabe Rabin online or call 561-659-7878 or Toll Free 877-915-4040.

Florida Securities Fraud Lawyer | West Palm Beach FL Broker Fraud Attorney

Business Litigation | False Claims Act & Whistle-blower Cases