Unsuitable Securities Claims

Stockbrokers must be licensed by FINRA (the Financial Industry Regulatory Authority). Consequently, they are subject to FINRA's rules. One of the fundamental rules imposed by FINRA is that stockbrokers are required to make appropriate or suitable recommendations to their customers based on their tolerance for risk and investment objectives. "Suitability" is determined by your income, net worth, age, investment objectives, risk tolerance and other factors.

Your stockbroker may also violate the suitability rule by failing to properly diversify your investment portfolio or by concentrating too much of your portfolio in volatile, or risky securities. The recommendation and sale of unsuitable investments constitutes securities fraud and if it caused a financial loss, may be the basis for a securities fraud claim.