Stoltmann Law Offices is investigating the following Structured Notes:
Accelerated Return Notes; Strategic Return Notes; Capped Leverage Return Notes; Target Term Securities; Market Linked Notes; E-Tracs; Return Optimization Notes; Auto-Callable Securities; Performance Leveraged Upside Securities (PLUS); and Equity Linked Securities (ELKs).
FINRA upgraded its suitability rules effective July, 2012, partly in response to greater retail sales of more complex products. The new suitability rules clarified and expanded the suitability duties to three levels:
(i) Reasonable-Basis Suitability – which requires both firm and individual broker, due diligence, understanding of a given product or strategy, and reasonable belief that it is suitable for some investors;
(ii) Customer-Specific Suitability – the long-standing requirement that a recommended product or strategy be suitable for the specific customer to whom it is recommended, though the new Rule is preoccupied with the required documented customer risk profile; and,
(iii) Quantitative Suitability – which requires that the amount or position size recommended also be appropriate (it used be a “churning” analysis).
New Rule 2111 also extended beyond products to encompass “investment strategies” and “hold” recommendations (though with considerable discussion). See FINRA Rule 2111 (eff. July 9, 2012). See also FINRA Reg. Notice 12-25 (May 2012) and 12-55 (Dec. 2012).
These investments have been determined to be unsuitable for some investors. A broker must take into account an investor’s age, net worth, investment portfolio and investment objectives before recommending a security. If he does not, his brokerage firm can be held liable for investment losses. Please call our securities law firm in Chicago to find out how you can bring a claim against your investment firm for losses. The call is free.
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