Elgin, IL asked in Securities Law for Illinois

Q: How can I prove my broker failed to diversify my portfolio and how terrible an error would it have to be for me to win a

lawsuit over it?

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1 Lawyer Answer
Jeffrey Michael Haber
Jeffrey Michael Haber
  • Securities Law Lawyer
  • Melville, NY

A: What you describe is also known as over-concentration. Over-concentration violates the suitability rules that financial professionals are required to follow. Over-concentration is one of the riskiest, and most speculative, investment strategies because the portfolio is not diversified and subject to the risks associated with the industry or type of investment product. Generally, if an investment professional concentrates a customer’s portfolio in an individual investment or type of investment (i.e., more than 10% of the entire portfolio), then the investment is considered to be over-concentrated. An attorney with securities arbitration experience can help you review your monthly statements to determine whether your investments are over-concentrated.

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