Unsuitable Investments

Brokers are required to determine whether a security is "suitable" for an investor before they can recommend that the investor purchase that security, or purchase that security for the investor in a discretionary account. A security being suitable for a particular investor essentially means that the security is appropriate for that investor. Suitability is based upon a variety of factors such as the investor's age, risk tolerance, investment experience, amount of time the money is expected to be invested, and tax considerations, among other things. If a broker recommends investments which are unsuitable, the brokerage firm and broker can potentially be held liable for resulting losses.