Overconcentration occurs when a financial advisor or stockbroker recommends that an investor place a disproportionally large amount of the investor’s assets in a single stock, industry, or sector. Overconcentration or failure to diversify often leads to significant financial losses when that product or sector declines.
It is, therefore, part of a broker’s responsibility toward investors to ensure that investors’ portfolios contain investments in a variety of products across different asset classes and industries. This diversification should align as well with the investor’s investment objectives and financial circumstances.
Failure to diversify can result from both intentional wrongdoings like fraud, as well as outright negligence by your broker or financial advisor.
Proper asset allocation is necessary to balance investment risk and reward according to the customer’s particular investment objectives. Asset allocation is accomplished by apportioning an investment portfolio among the three main classes of investment: equities, fixed income and cash equivalents. Generally, a portfolio that has a higher concentration in equities or stocks is riskier than a portfolio that holds mostly investment grade bonds. Thus, it would be improper for a conservative investor to be assigned to a portfolio that has a heavy concentration in stocks or equities.
At Levin Law, we have devoted a great deal of our practice to financial fraud claims in private arbitration and courtroom litigation. Our investment fraud attorneys have the knowledge and experience you need in investigating, compiling, and arguing cases before arbitrators and judges.
If you believe your financial losses are due to your financial advisor’s negligence or intentional wrongdoing, we will work tenaciously to help you recover those losses. Our successful track record spans both domestic and international investors who have been harmed by the negligence and fraud of financial institutions.
We offer focused legal representation designed to resolve your litigation issue as expeditiously as possible through mediation/negotiation, arbitration, or in court. Our experienced and aggressive trial lawyers have the knowledge and skills to effectively address your issue no matter how complex it may seem. We will always work within the confines of your goals and business plan pursuing the most efficient and cost-effective resolution that will work for you.
Our ultimate priority is to seek what is in your best interests while providing you with thorough and thoughtful legal guidance throughout every phase of the legal process.