Over-Concentration


A failure to adequately diversify investments in a portfolio can create a substantial risk of loss. When stock brokers or financial advisors invest a substantial portion of an investor’s assets in one security or in one class of investments, this overconcentration can be detrimental to the investor’s financial stability. Unfortunately, many conservative investors have faced tremendous losses recently as a result of overconcentration of their investments in the energy sector.

Brokers and financial advisors told investors who were looking for high-yield investment income that oil, gas, and other energy stocks were safe. Brokers promised that investing in energy stocks or buying into master limited partnerships could provide significant investment income with little to no risk because energy companies had business models which generated steady cash flow. Despite assurances that these energy stocks were not volatile and would not be affected by changes in oil prices, many of these investments plummeted in value as oil prices fell. In fact, some investors have lost 50 percent or more of the value of their investment portfolio due to overconcentration in energy stocks.

You should not have to bear the financial burden of losses caused by overconcentration, particularly if you are a conservative investor and were advised that heavily investing in energy stocks was a safe option. A stock fraud lawyer at Zamansky LLC can help you take legal action against the brokers and investment advisors who concentrated your portfolio in high-risk energy stocks. Contact our legal team as soon as possible so we can investigate your case and begin assembling your claim.

Your Options After Overconcentration Caused Financial Loss

Overconcentration is one of the riskiest strategies and most speculative investment strategies. Unfortunately, many investors were unaware of the overconcentration in their portfolios. Investment advisors sometimes recommend a portfolio of mutual funds that seem, at face value, to be diversified investments. However, when these funds are all heavily invested in energy stocks, this invisible overconcentration creates significant risk of financial loss. Whether investment advisors actually believed the energy stocks were as safe as promised is irrelevant; it was irresponsible of the advisors to over-concentrate investments in this sector on behalf of risk-adverse investors.

Victims of overconcentration can make a claim for failure to diversify and for the unsuitability of investments under Financial Industry Regulatory Authority (FINRA) Rules 2111 and 2090. It may be possible to recover full or partial compensation and other types of reimbursement for the irresponsible investment choices that were made by your broker or financial advisor.

Getting Help Today

A stock fraud lawyer at Zamansky LLC can help you make an overconcentration claim to recover damages for your financial loss. Our attorneys have more than 60 years of collective experience helping investors pursue claims against brokers. We will put this experience to work to fight for you to recover your losses. Contact us today to learn more.