our Securities Broker Or Financial Advisor Might Have Caused Your Coronavirus (Covid-19) Related Investment Losses
Soreide Law Group is examining potential lawsuits on behalf of investors against their brokers, financial advisors and respective financial institutions who possibly advised those investors to purchase unsuitable or misrepresented investments that have since plummeted in value because of the ongoing coronavirus pandemic.
S&P 500, DJI Rattled By Coronavirus, Panic-Stricken Investors
Between February 19, 2020 and March 23, 2020, the S&P 500–an index tracking the stock performance of 500 large-cap U.S. companies–fell from 3,386.15 to 2,237.40, representing a nearly 34% drop in value. During that same period, the Dow Jones Industrial Average (“DJI”)–measuring the stock performance of 30 large companies including Boeing and ExxonMobil–plummeted from 29,348.03 to 18,591.93 – a nearly 37% drop. Notably, this sell-off, which is largely attributable to the ongoing coronavirus pandemic, has persisted notwithstanding Federal Reserve’s slashing of interest rates and introduction of programs designed to ease volatility.
Investors Suffering Coronavirus Related Losses Could Have Been Sold Unsuitable Structured Products By Their Broker Or Advisor
Some investors who purchased structured products (also known as market-linked investments) tied to individual stocks and indices like the S&P 500 may have experienced grave losses given the turbulence in the U.S. financial markets.
Big financial institutions including JP Morgan, Morgan Stanley and UBS have issued billions of dollars in structured notes. As the Securities and Exchange Commission (“SEC”) puts it, these are securities whose cash flow characteristics depend on an underlying index or that have embedded options or securities in which investors’ returns could be “highly sensitive” or contingent on changes in values of underlying assets or indices. Also, these products generally do not contain principal protection.
For this reason, structured products may be unsafe and unsuitable for retirees and those with conservative objectives or liquidity needs. Notwithstanding, some unscrupulous brokers or financial advisors sell structured products to conservative, risk-averse investors without reasonable grounds to believe that those products are appropriate. Also, some brokers or financial advisors misrepresent or omit the nature and risks of these products when recommending them.
FINRA Rules On Suitability
Notably, FINRA requires securities brokers and financial advisors who recommend investment strategies or securities transactions to investors to have a “reasonable basis” to believe that such recommended investment strategy or transaction is suitable. These financial professionals must consider the client’s investment profile, which includes the client’s financial situation, age, tax status, investment experience, investment objectives, time horizon, risk tolerance and liquidity needs. In fact, FINRA commonly finds that brokers and financial advisors violate Rule 2111 by making unsuitable recommendations.
Investors can sue to recover investment losses caused by their broker or financial advisor’s unsuitable recommendations or misrepresentations. Have you sustained losses by investing in structured products or other risky investments which have since declined in value because of the coronavirus pandemic? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The law firm has recovered millions of dollars for clients who have suffered losses due to misconduct of brokers and brokerage firms.