Excessive Risk Commodity Investments
A stockbroker fraud attorney begins with an analysis of the appropriate risk level for each investor. Some high-risk investors are comfortable with commodities, the fastest game in town! Some investors are appropriate for low risk vehicles where preservation of capital and income are the pole stars. If you are a retiree living in South Florida, Boca Raton, Fort Lauderdale, and you intend to live off an income flow from your total accumulated assets, commodities are not for you.
It is a violation of the stockbroker's duty of fiduciary care to place an investor such as that in a commodity vehicle. Placing a conservative investor in a passive investment in which the underlying investments are in commodities is a violation of the fiduciary duty and responsibility owed by stockbrokers to clients. The volatility of commodities presents the opportunity for great gains and startling losses. The commodity indices weight investments on the commodities with the largest trading volume or the greatest consumption (usually agricultural and energy commodities). It is the very nature of high-volume trading that attracts commodity investors. Under few circumstances is a commodity indices appropriate for medium to low risk investor. Further, passive indices almost always are narrowly focused, which increases the risk reward ratios.
If your stockbroker has presented an investment vehicle in commodities you should ask for all written documents and past performance results. Maintaining a claim for stockbroker fraud, based on an excessive risk commodity investment, starts with a presentation to the arbitrator of the representations of the investment medium. Your stockbroker fraud arbitration attorney goes on to present your risk level and representations made to you by the stockbroker. Even the more traditional commodity investments, those that traded on US commodity futures in 16 of the 19 of those tracked in the DJ-UBS index are inappropriate investments for medium to low risk investors. Ask if the commodity trackers are based on medium-term notes, or backed by swaps, or the commodity contracts. The mix of the of previous trackers are the key to presenting the true risk when making an excessive risk commodity investment claim against a stockbroker. By example natural gas which is fully 12% of the DJ UBS commodity index has a volatility track record clearly inappropriate for medium to low risk investors. Your stockbroker fraud attorney will begin with a presentation of your history of investments, your personal level of familiarity with commodities and the volatility factors there and contrast that with the presentation of your stockbroker.
Most common features of any commodities fraud involved unsolicited high-pressure phone calls; claims of significant and fast profits, representations that there is virtually no risk involved in the vehicles and unsolicited claims by your stockbroker as to the appropriateness of this vehicle. Your stockbroker fraud attorney in arbitration will subpoena the office manager as well as your individual stockbroker. At this point the office manager will most likely be your strongest witness in any stockbroker fraud, excessive risk, and claim in securities arbitration.