New report targets investments that bring out the worst in financial advisers and stockbrokers
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As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
A new report highlights the ways some investment and brokerage firms fail to act in their clients’ best interests and so increase the risks of steep financial losses.
Specific financial products — complex and risky investments such as nontrading REITs, variable annuities and products linked to market volatility — seem to bring out bad behavior according to the most recent examination report issued by the financial industry regulatory authority (FINRA).
A particular investment may not be a good fit for everyone. Each investor has his or her own level of experience, risk tolerance, goals and so on. Yet some brokers and advisers ignore their clients’ unique needs.
This disregard is evident when firms maintain accounts with excessive concentrations of products ill-suited to the investors. These include sector-specific funds, which lack diversification, as well as alternative investments in structured notes and illiquid securities, FINRA’s investigations found.
However, fully understanding the features and risks of these products can require a level of sophistication that not all investors have. For instance, as the report notes, the limited transparency of illiquid securities, such as private placements and some Real Estate Investment Trusts, can make it difficult for an investor to know the value of his or her holdings.
With other types of products, too, brokers and advisers sometimes seemed unmoved by their clients’ needs. FINRA found some recommended exchanging variable annuities in ways that resulted in increased fees or lost benefits. Meanwhile, some also recommended volatility-linked products, like Inverse VIX funds, inappropriately to clients, it reported.
Perhaps not coincidentally, some of these products charge hefty commissions.
The report, issued to help firms improve their practices, also notes that some fail to properly protect against excessive trading — a means by which unscrupulous brokers or advisers can wrack up additional charges.
If you suffered heavy losses due to a broker or adviser’s disregard for your investment needs, you may be able to recover your money through a process called FINRA arbitration.
FINRA arbitration is a unique, narrow area of the law. The attorneys at Epperson & Greenidge have extensive experience working within FINRA and we specialize in bringing these arbitration claims on behalf of investors.
We accept all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so call 877-445-9261 now to speak to a private placement investment fraud attorney at Epperson & Greenidge for free.