Individual investors may have experienced significant losses in their retirement accounts during the coronavirus (COVID-19) outbreak. The market has declined significantly in 2020. While the market will generally have its ups and downs (and atypical circumstances may cause declines), questions may arise concerning whether investment portfolios were properly managed by securities brokers and brokerage firms to protect investors against the massive drop in the market during the coronavirus pandemic. It is predicted that a large portion of potential claims by investors will concern whether the portfolio was overly concentrated in certain sectors of the market or investment types, such as stocks, rather than properly diversified among all sectors and investment types.
To determine whether a securities broker and brokerage firm made unsuitable investment recommendations to an investor, a potential claim must be evaluated in light of each investor's objectives, risk tolerance, experience, financial needs, and other considerations. The portfolio must be fully analyzed to ascertain if it may have been too heavily weighted toward one or more sectors of the market or investment types, such as stocks, which lost much more in value than the overall market. Over the past several months, some of the sectors to perform much worse than the overall market include those industries most impacted by the pandemic, such as travel (cruise lines and airlines), hotels, resorts, restaurants, and gambling. A properly diversified portfolio should not be concentrated in these sectors only, irrespective of the current circumstances brought about by the coronavirus. For more information concerning concentration, investors may review an article published by the Financial Industry Regulatory Authority (FINRA) titled “Concentrate on Concentration Risk.” The article outlines the factors that may cause concentration and provides tips that can help manage concentration risk.
Over the past 19 years, Joel Ewusiak has represented many investors, securities brokers, and brokerage firms in lawsuits and arbitration proceedings that include allegations of unsuitable investment recommendations and overconcentration. Please contact Joel for legal assistance with your specific dispute.