Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses with full-service brokerage firms because of the unsuitable recommendation and speculation of U.S. Treasury STRIPS.
An arbitration claim was filed in late January on behalf of one investor. According to the claim, the advisor speculated that the value of U.S. Government debt would fall, exposing clients to inappropriate risk levels. Traditional U.S. Treasuries are more stable than STRIPS because the latter is traded at a steep discount to maturity value instead of interest. The claim also alleges that the advisor’s short selling of these products evolved into progressively more distant maturities, further increasing the risk to the investor.
Reportedly, the same financial advisor named in the claim also had a number of investor complaints from multiple states, including California, Washington, Florida and New Jersey. Furthermore, the complaints all seem to involve government debt, including U.S. Treasury STRIPS. Allegations in the claims include misrepresentation of risk, breach of fiduciary duty, over-concentration in client accounts, inappropriate use of leverage and margin and failure to follow instructions. Securities arbitration lawyers believe advisors at other full-service brokerage firms may be speculating with clients’ money in similar ways.
In some cases, advisers may be promoting high-risk strategies as low-risk, reasonable return strategies in an attempt to lure high net-worth investors with conservative risk tolerances. Under FINRA rules, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.
If you suffered significant losses as a result of speculative U.S. Treasury STRIPS, which were unsuitable for you, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or firstname.lastname@example.org for a no-cost, confidential consultation.