How Our Securities Fraud Attorney Assists With Overconcentration

broker screen showing over-concentration in stocks

If you lose money due to suspected overconcentration in your investment portfolio, the securities fraud attorneys at Erez Law PLLC can help. We understand the complex rules governing the securities industry and can identify when misconduct might have occurred. We can analyze your portfolio to pinpoint instances of broker or advisor misconduct, build a strong case for investment loss recovery, and seek rightful compensation for your losses. Call us today for a free case consultation.

What Is Overconcentration?

Overconcentration in investment portfolios refers to the excessive allocation of assets in a limited number of investments or a single investment or sector. This approach contradicts the fundamental investment principle of diversification, which spreads risk across various assets. Overconcentration can be unsuitable for many investors and not in their best interest.

The risks associated with overconcentration are significant. Overconcentration exposes investors to heightened volatility and potential losses as the portfolio’s performance becomes heavily dependent on the narrow range of selected investments. If these select assets underperform, the entire portfolio suffers significantly.

In some cases, a financial advisor or firm might overconcentrate a portfolio by funneling disproportionate investor funds into specific assets for personal gain or based on a misguided belief that overconcentration is warranted. Erez Law PLLC has handled cases involving overconcentration in stocks, bonds, annuities, structured products, REITs, alternative investments, and hedge funds. Here are some examples of the financial services firms that Erez Law PLLC has pursued for the overconcentration of investment assets:

How a Securities Fraud Attorney Can Help

In investment fraud and overconcentration arbitration cases, securities fraud attorneys can take several steps to build solid cases and seek justice for mistreated investors, such as:

  •  Conducting Legal Assessments of Portfolio Diversification: Lawyers examine asset allocations within portfolios to evaluate whether they are diversified to minimize concentration risk.
  • Identifying Breaches of Fiduciary Duty by Advisors: They scrutinize the actions of financial advisors to pinpoint any breaches of fiduciary duty.
  • Reviewing Investment and Risk Profiles: Attorneys review investor risk tolerances and financial goals to determine the suitability of investments and identify any undue concentrations.
  • Analyzing Financial Advisor Recommendations and Actions: They meticulously analyze the recommendations and actions of financial advisors under the guidelines of FINRA Rule 2111. This rule mandates that advisors must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer.
  • Documenting the Timeline of Investments and Communications: Lawyers create detailed timelines of all investments and communications between investors and advisors, providing a clear picture of the events leading to investment losses.
  • Pursuing FINRA Arbitration Claims: Attorneys can file claims with the Financial Industry Regulatory Authority (FINRA) for arbitration, a common route for resolving securities disputes.
  • Initiating Claims and the Discovery Process: They initiate arbitration claims and engage in the discovery process, gathering evidence and information vital for their clients’ cases
  • Handling Pre-Hearing Preparations and Case Presentation: Finally, lawyers handle all pre-hearing preparations and present their clients’ cases effectively, advocating for the recovery of investment losses and holding responsible parties accountable.
  • Obtaining Expert Testimony on Industry Standards and the Impact of Overconcentration: Securities fraud lawyers often work with expert witnesses who can testify about industry standards and how overconcentration can lead to significant losses.

Contact a Securities Fraud Attorney Now

If you’re facing losses due to overconcentration in your investment portfolio, Erez Law PLLC can help. Our team understands the challenges of these situations and is ready to review your case. Don’t let uncertainty hold you back. Reach out to us for a free consultation today.