HOUSTON, Nov. 7, 2008 (GLOBE NEWSWIRE) -- The Securities Law Firm of Shepherd Smith Edwards & Kantas LLP, (www.sseklaw.com), is currently investigating claims on behalf of investors who have sustained economic losses as a result of overconcentration in "preferred" stocks issued by financial companies. Many financial based companies (mortgage companies, banks and brokerage firms) began issuing shares of preferred stock earlier this year in an effort to raise much needed cash. Many brokerage firms, including UBS, Morgan Stanley (Symbol: MS) and Citigroup (Symbol: C), were either involved in the underwriting or marketing of these products. Its possible that extra "sales credits" were utilized to incentivize brokers into marketing of these products. Based on contact with dozens of investors, it appears there was a rash of sales to investors of preferred stocks issued by financial companies. This has resulted in many investor complaints involving Brokerage firms overconcentrating clients in securities issued by financial based companies. Examples include overconcentration in issues of Fannie Mae (Symbol: FM), Freddie Mac (Symbol: FRE), Washington Mutual (Symbol: WM), Lehman Brothers (Symbol: LEH), Wachovia (Symbol: WB), Bear Stearns (Symbol: BST), and Merrill Lynch (Symbol: MER).
One of the most important rules of investing is diversification. If a broker places (or concentrates) a customer's investments in one asset class, sector, industry or other investment to the point that the portfolio lacks sufficient diversification and this asset class, sector, industry or other investment declines significantly, the customer might be exposed to increased and unnecessary risk of loss. A broker who does not diversify his customers' portfolio is potentially liable if that investment declines in value. In addition, the broker may be liable if his recommendations were based on self-serving motives or even simple lack of due diligence. If your financial advisor recommended a portfolio overconcentrated in a single market sector or industry, including but not limited to the financial industry, the law firm of Shepherd Smith Edwards & Kantas would like to hear from you.
Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and staff with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses. We have represented clients in Federal and state courts and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. Collectively, we have represented over 1,000 investors during the last 18 years.