Failure to Diversify / Overconcentration

Failure to Diversify Creates Unnecessary Risk for Clients

Diversification is necessary for prudent investing. One of the time-honored investment maxims is that risk can be reduced by diversification. It is important to have in one’s portfolio stocks that do not all depend on the same economic variables, such as consumer spending, business investment, housing construction, and so forth. A broker or advisor must diversify unless it is clearly prudent not to. Diversification is a universally recognized characteristic of prudent investing and, in the absence of specific instructions from the client to do otherwise, a broker or advisor’s lack of diversification of a client’s account may constitute a breach of that broker or advisor’s fiduciary obligations.

Did You Suffer Losses Due to Over Concentrating or Failure to Diversify? Recover Your Losses!

Whether or not the broker or advisor is a fiduciary, the expected treatment in the broker-customer relationship is a diversified portfolio. Anything that deviates from that needs to be fully substantiated and justified. The decision not to diversify must be consistent with the customer’s investment objectives and risk tolerances, as well as fully grounded in the broker’s research into (a) the portfolio design and (b) the specific securities selected. It should not be sufficient simply to have a reasonable basis for recommending a particular security; rather, the broker must also have reasonable grounds for deviating from the norm of prudent investing.

To help us evaluate your chances for a successful recovery for “Failure to Diversify” or “Over concentration” claim we offer a free and confidential claim evaluation.

Client Reviews
★★★★★
Howard Rosenfield is truly a life saver. After months of working with my financial advisor, I found out he was making risky investments without my knowledge. When I discovered how much money I lost, I thought there was nothing I could do. Howard explained all the difficult terms and what exactly my financial advisor did wrong. If it wasn't for Howard, I would never have recovered my losses and would be under extreme financial distress to this day. J.
★★★★★
Howard’s experience and advice throughout this ordeal was invaluable and reassuring. The law in general is complicated, difficult to understand and very personal. Financial misappropriation is even more personal but Howard’s years of experience and calm demeanor helped keep me calm, focused and moving forward. For anyone in need of a knowledgeable and experienced Investment Recovery Attorney I strongly recommend Howard. Laura
★★★★★
I was filled with anxiety and stress when I selected Attorney Howard Rosenfield to represent me. Instantaneously, I felt comfortable and at ease. Attorney Rosenfield listens attentively to the facts and asks questions and competently reiterates and verifies the accuracy and completeness of my statements. Perseverance, trustworthy and superb legal and communication skills mark Attorney Rosenfield to be one of the best in his field of law. Helen