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Suitability & concentration claims

When the recommendation never fit you in the first place.

A suitability claim isn't about hindsight. It's about a recommendation that was wrong for you at the moment it was made — too risky, too concentrated, too illiquid, or too complex for your stated objectives, time horizon, and risk tolerance. When an unsuitable recommendation produces a loss, the firm can be held to account.

What Makes a Recommendation Unsuitable

The standard behind a suitability claim.

Under FINRA Rule 2111, Regulation Best Interest, and the fiduciary duty owed by investment advisers, a recommendation must fit the specific investor. Suitability is judged at the time of the recommendation, against the objectives and risk profile the firm itself recorded.

i.

Over-concentration

A single position or sector holding a disproportionate share of your liquid net worth — often exceeding 25% — that no prudent adviser would have allowed, exposing you to a loss diversification would have prevented.

ii.

Illiquid alternatives

Non-traded REITs, BDCs, private placements, and interval funds recommended to investors who needed access to their capital — a recurring suitability problem given the products' cost and lock-up features.

iii.

Complex & leveraged products

Structured notes, market-linked CDs, and leveraged or inverse ETFs held far longer than their design intends — complexity and leverage sold to investors who were never in a position to bear it.

iv.

Risk-tolerance mismatch

A stated 'conservative' or 'moderate' profile paired with a portfolio of speculative, volatile, or alternative positions the investor never authorized and did not understand.

Proving the Claim

Where the evidence of unsuitability lives.

Unsuitable-investment claims are proven from the record — much of it created by the firm itself. The discrepancy between the documented profile and the actual portfolio is frequently the foundation of the case.

i.

Your investment policy statement

The IPS and account-opening documents record the objectives, time horizon, and risk tolerance the firm assigned you — the benchmark against which the actual holdings are measured.

ii.

The account statements

Trade history and holdings show the concentration, leverage, illiquidity, or drift that a suitable portfolio would not contain, and quantify the loss it produced.

iii.

The firm's own files

Supervisory records, compliance correspondence, and product disclosures often show the firm knew — or its own procedures required it to know — that the recommendation did not fit.

iv.

Compensation records

Where the unsuitable product carried outsized commissions or revenue-sharing to the firm, that conflict is frequently what explains the recommendation.

Frequently Asked

Common questions about this claim.

What is an unsuitable investment claim?
It is a claim that a firm recommended an investment that did not fit your objectives, time horizon, liquidity needs, or risk tolerance at the time it was recommended. Suitability is judged when the recommendation was made — not by how the investment later performed — under FINRA Rule 2111, Reg BI, and the adviser fiduciary standard.
Are non-traded REITs and BDCs a common source of claims?
Yes. Non-traded REITs and business development companies are a recurring suitability problem because of their illiquidity, high fees, and complexity — features that make them unsuitable for many of the retirees and conservative investors to whom they are frequently sold.
Is over-concentration by itself enough for a claim?
Concentration is one of the strongest indicators, particularly where a single position or sector exceeds roughly 25% of liquid net worth and contradicts a documented risk profile. It is usually assessed alongside the investment policy statement and the firm's duty to diversify.
How do you prove a recommendation was unsuitable?
By comparing the profile the firm documented — objectives, time horizon, risk tolerance — against what it actually placed in the account, using the IPS, account statements, and the firm's own supervisory and compliance records. Much of the proof is created by the firm itself.
What is the deadline to bring an unsuitability claim?
It varies by forum and theory: state statutes of limitation typically run two to four years from discovery, FINRA's eligibility rule generally bars brokerage claims after six years, and federal securities claims have their own periods. Earlier consultation is strongly preferable.
Request a Review

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Initial inquiries are reviewed personally and treated as confidential whether or not we ultimately work together. We respond to substantive case inquiries within one business day. There is no cost or obligation associated with the initial review.

Florida-based, available nationally for court, AAA, and FINRA matters across the United States.

Useful information for first contact
  • The advisory firm, private bank, or broker-dealer involved
  • The approximate time period of the conduct
  • The nature of the relationship (advisory, trust, brokerage, hybrid)
  • The investments at issue and approximate loss
  • Whether any complaint, claim, or regulatory inquiry has already been filed

Or reach us directly at rafael@recaldelaw.com · (305) 792-9100