Unsuitable Investment Sales

Unsuitable Investment Sales

Columbus Investor Attorneys Discuss Unsuitable Investment Sales

Stockbrokers and others who sell investment products have a duty to recommend only those investment products that are suitable to the particular individual investor. The Financial Industry Regulatory Authority (FINRA) requires stockbrokers and others to carefully consider the investor’s income, other investments, current financial circumstances, future finances, and numerous other factors when recommending an investment product. FINRA knows that when an investor buys into a bad deal or falls victim to a bullying or dishonest broker, the financial consequences can be severe. Individuals have lost their life savings on . Even when a worst-case scenario does not play out, rebuilding a retirement nest egg or replacing income can take years.

The federal Securities and Exchange (SEC) and the Division of Securities within the Ohio Department of Commerce exist to protect investors, but those agencies typically only act after a fraud that rises to a criminal level has been perpetrated upon a large group of investors. These large-scale, Bernard Madoff type investment scams, account for only a small fraction of the unsuitable investment product sales. Thus, it is important that investors know when not to trust deals that appear too good to be true, when to say no to investment salespeople, how to identify investment advisors who seem to be making guarantees that cannot be met, and where to turn when they have been duped by an unscrupulous or unknowledgeable investment salesperson.

In addition to reporting such offers and scammers to the appropriate law enforcement officials, actual and potential victims of unsuitable investment sales tactics in Ohio should reach out to Columbus investor protection such as Leist Warner to explore their options for receiving reimbursements, restitution, and civil damages for the sale of unsuitable investments.


Recognize Bad Deals

Any investment promoted as risk-free, highly profitable, and exclusive should raise a red flag. Investing always comes with the possibility of losing money. Also, every stock, annuity, or other form of investment has to have a public record of its identity, backers, and performance. The basic SEC law specifically requires the following information to be publicly available:

  • A description of the company’s properties and business;
  • A description of the security to be offered for sale;
  • Information about the management of the company; and
  • Financial statements certified by independent accountants.


If any of that information is not easy to find, current and potential investors need to suspect a bad deal.


Callout Dishonest Brokers

Ohio’s Division of Securities publishes a particularly useful series of guides to avoiding investment fraud. In particular, the agency alerts investors to be wary of deals promoted as being available only to members of their church or volunteer organization—something called affinity fraud—and scams targeting the elderly. Practices that put investors most in danger of having their money taken under false pretenses include:

  • High-pressure selling techniques such as “one-time” offers, seminars that require travel and paid registration, and statements that making a particular investment is the only way to prevent some adverse consequence.
  • International get rich quick schemes.
  • Promises of early retirement.
  • Unusually high rates of returns, even when financial documents are produced; this is a warning that an investment opportunity may actually be a pyramid sales operation or a Ponzi scheme.
  • Churning, which involves trading securities quickly so that numerous fees can be charged even as profits and losses become increasingly difficult to track.
  • Unsuitable investment advice that is not tailored to fit the needs of the investor.


The last item bears special attention because promoting investments that will not benefit individual investors constitutes is the most common form of misconduct that leads to substantial losses for investors. Stockbrokers, investments advisors, annuity agents, and several other categories of professional salespeople who market and accept payments for investment products must qualify for licenses and consistently meet high ethical standards for acting in their clients’ best interests. Doing things like encouraging investors to exceed their preferred levels of risk, promoting the purchase of stocks virtually guaranteed to decline in value, and convincing elderly people to put money into financial products that take a long time to produce returns can all be considered unsuitable and, therefore, worthy of speaking to an attorney who represents investors, such as those at Leist Warner.


Do Not Lose Money to Unsuitable Investment Sales Practices

If any company or person has sold, or tried to sell, you an unsuitable investment in an unsuitable way, you most likely have grounds for an investor dispute. Starting such a legal action with the assistance of a Columbus, Ohio, attorney who represents investors can help you recover any money you put toward a bad investment and also receive monetary damages for suffering from fraud. The legal action can prevent other people from getting cheated, as well.

The investor protection lawyers at Leist Warner have many years of experience representing investors in financial malfeasance cases, and we know the laws regarding unsuitable investments. If you need to hold a dishonest or incompetent investment salesperson to account, call us at (614) 222-1000 to schedule a free case consultation. You can also get in touch with us through this webpage.

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