Investment advisors, broker-dealers, and money managers owe a fiduciary duty to their clients. Financial Industry Regulatory Authority (FINRA) Rule 2111 requires that broker-dealers have a reasonable basis to believe a recommended investment or investment strategy is suitable for the customer. Risk tolerance is one of the key factors in determining the suitability of investments. Brokers’ and advisors’ fiduciary duties also encompass other obligations such as full disclosure of the risks of investment recommendations and diversifying client portfolios rather than over-concentrating investments in a particular sector.
Unfortunately, many advisors and brokers failed to fulfill their fiduciary obligations when advising clients to invest in oil, gas and energy stocks and master limited partnerships (MLPs). Advisors and brokers did not disclose the excessive risk of these investments, misleading conservative investors into purchasing volatile investments which could experience substantial decline in the event of crashing oil prices. Many income-seeking investors, particularly retirees seeking low-risk investments, invested in oil and gas stocks, oil and gas funds, and master limited partnerships concentrated on oil and gas investments. Some of these investors have experienced declines of over half of the value of their investments.
Investors who have suffered substantial losses may be able to pursue legal action to recover their lost capital from the brokers and advisors who failed to fulfill their duties. Zamansky LLC helps investors bring a legal action based on excessive risk as a violation of a brokers’ fiduciary duty. Contact a stock loss lawyer at our firm today if you suffered investment losses in oil and gas stocks, funds or MLPs.
The Rights of Oil and Gas Investors Who Experienced Losses Due to Excessive Risks
In recent years, energy investments were marketed to investors as safe income-producing investments which would provide a high yield at a time of low interest rates. Investors seeking an alternative to certificates of deposit and bonds heeded the advice of their financial advisors and the sales pitches of brokers and invested in oil, gas and energy stocks, funds and MLPs. Unfortunately, the excessive risks associated with these types of investments were not always communicated to the investor.
Many investors, particularly those who invested in master limited partnerships, believed they were purchasing investments similar to bonds when in fact their actual investments were much riskier. The investments were unsuitable for conservative investors, who did not have the risk tolerance to invest heavily in energy commodities.
Investors who suffered losses due to unsuitable investment advice can file a claim with FINRA and seek to resolve their dispute through arbitration or through an individual lawsuit or class action litigation.
Get Help from an Experienced Stock Loss Lawyer
Zamansky LLC believes that financial professionals should be held accountable for inappropriate investment advice, particularly when conservative investors are enticed into high-risk investments due to misleading, incomplete or self-serving information.
We have helped clients across the country pursue claims against large brokerage firms and money management professionals. We have the experience necessary to help you prove a claim based on excessive risk or another cause of action to recover investment losses. Contact Zamansky LLC today to learn more.