Fisher Investments Client Wins Award In Arbitration

Christopher Gray Also Represents Investors in Similar Case

A client who filed an arbitration claim against Fisher Investments could be awarded more than $300,000 in her Fisher Investments complaint. The award against Fisher Investments was given after the client complained that her account was over-concentrated in stocks.

According to the complaint, the client’s money was reportedly highly invested in stocks. The complaint alleged that almost one hundred percent of her portfolio was invested in stock, which was unsuitable for her, given her age and risk tolerance. Furthermore, the client alleged that she had not wanted to invest her money with Fisher investments, but felt pressured to do so.

Because the client likely signed an arbitration agreement when she invested with Fisher Investments, she was unable to file a lawsuit and instead filed her complaint with JAMS arbitration. The arbitrator in the case apparently agreed with the investor, finding that Fisher did not tailor its recommendations to the client specifically and instead suggested a portfolio that was not suited to her.

According to Bloomberg (07/07/11), a spokesperson for Fisher Investments argued against the arbitrator’s finding, saying, “The decision was completely wrong on the law and the facts.” He went on to note that Fisher has lost one arbitration in seven years, highlighting the integrity of the financial firm.

The complaint alleged that the client, Sharyn Silverstein, phoned Fisher Investments with her concerns about the lack of bonds in her portfolio but was told she would pay a fee if she quit, so she allowed the company to continue managing her account. Silverstein reportedly lost approximately $376,000 between September 2007 and October 2008.

Although her losses were above $300,000, the actual amount of the award from arbitration has not been made public. In addition to recovering her losses, Silverstein may also be awarded attorney’s fees.

Professional registered investment advisors are under a duty to act in the best interests of their clients, taking into account their risk tolerance, age and financial goals. Failure to do so could potentially be a breach of fiduciary duty, which could result in arbitration claims being filed against the individual advisor or the financial firm that employs the advisor.

InvestorLawyers.net’s founder Christopher J. Gray is presently handling a case against

Fisher Investments on behalf of investors who (similar to the claimant in the case that was won) allege that Fisher exposed them to inappropriate risks by over-concentrating their accounts in almist 100 percent stocks and other investments exposed to losses in the event of drops in the stock market. The complaint alleges that rather than receiving the customized investment plan they paid for, the investors were placed in Fisher’s “one size fits all” investment scheme which was completely unsuitable and entirely misrepresented to them.

Specifically, the clients are retirees who entrusted a large portion of their life savings to Fisher and were relying on the assets managed by Fisher to provide income during their retirement and were very concerned that their money be managed in a manner that would provide a reasonable level of return while minimizing the risk of the loss of any substantial portion of their principal.

Although Fisher, which is a registered investment advisor charged with a fiduciary standard for its clients, allegedly promised an individualized investment plan for the clients, which would take into account their status as retirees focused on principal preservation, Fisher allegedly did nothing more than place plaintiffs in a “one size fits all” investment regimen which followed Fisher’s general investment plan.

Further, with its full discretionary authority, Fisher allegedly completely ignored bonds or other fixed income assets, even though plaintiffs would need to draw an income from their accounts. Almost all of the investors’ assets were placed at great risk in the stock market. Ultimately, this risky strategy, which was completely unsuitable for plaintiffs, backfired.

When the broad stock market indices plummeted in 2008 and early 2009, the value of the investors’ accounts, which were almost completely invested in stocks or Fisher funds containing stocks, lost approximately $1,200,000.

Despite its “one size fits all” approach, Fisher allegedly touted tailoring a client’s investments to their particular needs, emphasizing consideration on the client’s unique circumstances in designing a portfolio strategy. Specifically, according to the Fisher’s Client Owner’s Manual:

Your Investment Counselor will be your main point of contact, serving as a liaison between you and the Investment Policy Committee (IPC). Your IC will first evaluate your investment objectives, including your time horizon and income needs, and relay any relevant unusual requirement to the IPC for consideration in their management of your portfolio. He/she will discuss our recommendations with you prior to strategy implementation. Thereafter your Investment Counselor will monitor your account and keep you informed of the IPC’s thinking, as well as process any change in your financial circumstances. Your IC will provide service personalized to your preferences, and will be available to answer portfolio or market related questions in a much detail as you prefer

Fisher also allegedly touted its supposed “individualized” tailoring of client portfolios in a marketing pamphlet entitled “Wealth Management Guide” that Fisher provided to plaintiffs, as follows:

At Fisher investments, each client has a team of contacts who personally known them and their investment profile. You keep us current on what’s going on in your life, and we will manage your investments in a way we believe is best for you based on your circumstances, both for now and into the future. We constantly evaluate your portfolio, bearing in mind such key indicators as your time horizon, your objectives, the sectors or stocks want to keep or avoid, the capital gains implications of each of your positions, your need for immediate access to your assets, and how involved or removed you want to be from the day-to-day details of managing your account. Your individual questions will be discussed with your personal Investment Counselor, who will stay in contact with you regarding any important developments in your account. Your Investment Counselor will discuss and understand your needs and is available to keep you abreast of the latest thinking from Ken Fisher and the rest of the Investment Policy Committee (IPC) on the markets and your portfolio. The firm utilizes proprietary portfolio management software, as well as other investment technology infrastructure, all designed to implement individual portfolios consistent with the IPC’s view and your needs.

[Emphasis supplied].

Investors who believe that may have been the victim of misrepresentations or account mismanagements by Fisher Investments may contact InvestorLawyers.net attorneys by filling out the form below or e-mailing newcases@investorlawyers.net.