Overconcentration
At Varnavides Law, we stand with investors who have suffered financial harm due to poor advice from their brokers or financial advisors. Overconcentration happens when too much of your money is put into one type of investment, leaving you exposed to big losses if things go wrong.
As an experienced overconcentration lawyer, Gary Varnavides stands as your advocate to pursue the recovery of your losses. We provide empathetic guidance and challenge those responsible to hold them accountable for the harm you’ve endured.
What Is Overconcentration in Investments?
Overconcentration in investments means having too many of your assets tied up in one stock, sector, or type of investment. It’s like putting all your eggs in one basket. When that basket drops, you can lose a lot. Brokers have a duty to spread out your investments to reduce risk, based on your goals, age, and how much risk you can handle. But sometimes, they don’t do that, leading to big problems.
For example, if more than 20% of your portfolio is in one company’s stock, that could be overconcentration. This is risky because if that company faces trouble—like a market downturn or bad news—the value can drop fast.
We’ve seen this in cases where investors lost savings because their advisor focused too much on tech stocks or energy companies. At Varnavides Law, we help people who have faced this kind of neglect. Our focus is on making things right for you, the investor.
Diversification is key to safe investing.
It means mixing stocks, bonds, and other assets so one bad performer doesn’t ruin everything. When brokers ignore this, it’s often a breach of their duty.
Signs of Overconcentration in Your Portfolio
How do you know if your investments are overconcentrated? Here are some common signs to watch for:
- Heavy focus on one stock or sector: When a substantial portion of your assets is tied to a single company or industry, such as oil or real estate, it raises concerns about unnecessary risk—leaving you exposed to market shifts that could erode your hard-earned savings.
- Lack of variety in asset types: Your portfolio should include a mix of stocks, bonds, cash, and maybe international options. If it’s mostly one type, risk goes up.
- Unexpected big losses: If a single event, like a stock price drop, wipes out a large part of your savings, overconcentration might be the cause.
- Advisor ignores your risk level: If you’re nearing retirement and your portfolio is full of high-risk investments, that’s not right. Brokers must tailor advice to you.
How Brokers Can Be Held Liable for Overconcentration
Brokers and financial advisors have rules they must follow. Under FINRA (Financial Industry Regulatory Authority) guidelines, they need to recommend suitable investments and diversify properly. If they don’t, and you lose money, they can be held responsible.
Liability often comes from:
- Breach of fiduciary duty: Advisors must put your interests first. Overconcentrating for their own commissions breaks this trust.
- Negligence or misconduct: Failing to warn about risks or ignoring your instructions can lead to claims.
- Unsuitable recommendations: If the investments don’t match your profile—like aggressive stocks for a conservative investor—that’s grounds for action.
In our practice, we use evidence like account statements, emails, and expert analysis to prove liability. We’ve successfully arbitrated cases where brokers overconcentrated in sectors like healthcare or commodities, causing avoidable losses. Recovery can include your lost money, interest, and sometimes legal fees.
Common Types of Overconcentration Cases We Handle
At Varnavides Law, we specialize in investment fraud and misconduct, including various overconcentration scenarios. Here are some we see often:
- Single-stock overconcentration: Too much in one company’s shares, like tech giants or energy firms. When the stock tanks, losses pile up.
- Sector-specific focus: All investments in one industry, such as real estate or biotech. Economic shifts can devastate these portfolios.
- Asset class imbalance: Overloading on stocks while ignoring bonds or cash, exposing you to market volatility.
- Employer stock overload: For those with company plans, holding too much employer stock without diversification advice.
We also handle related issues like churning (excessive trading for commissions) or unauthorized trades that lead to overconcentration. Each case gets our full attention.
Why Choose Varnavides Law for Your Overconcentration Claim
Choosing the right lawyer matters. At Varnavides Law, Gary Varnavides brings years of focus on securities litigation and investment fraud. We’re not a big firm with divided attention—we dedicate ourselves to each client for the best results.
What sets us apart:
- Victim-focused approach: We always side with the investor, not the brokers. Our goal is your recovery.
- Nationwide experience: We’ve handled cases across the U.S. in FINRA arbitration and courts.
- Clear communication: We explain everything simply, without jargon, so you understand your options.
The Process of Filing an Overconcentration Claim
Filing a claim doesn’t have to be overwhelming. Here’s how we handle it at Varnavides Law:
- Free consultation: Contact us, and we’ll discuss your situation. Bring any statements or advisor communications.
- Case review: We analyze your portfolio for overconcentration signs and liability.
- Gather evidence: We collect documents, talk to experts, and build your case.
- File the claim: Most go to FINRA arbitration—faster and less costly than court.
- Negotiation or hearing: We aim for a fair settlement; if not, we present at a hearing.
- Recovery: If successful, you get compensation for losses.
This process can take months, but we keep you updated. We’ve recovered significant amounts for clients hurt by overconcentration, often without a full trial.
Start with a call—we’re ready to help.
Frequently Asked Questions (FAQs)
What is the difference between overconcentration and failure to diversify?
Overconcentration is when too much of your portfolio is in one area, while failure to diversify means not spreading investments enough. Both increase risk and can lead to broker liability. We handle both at Varnavides Law.
Can I recover losses from overconcentration even if I agreed to the investments?
Yes, if the broker didn’t explain risks or it wasn’t suitable for you. We prove this with evidence.
What if my overconcentration involved employer stock?
We handle those too. Advisors must advise on diversification, even with company plans.
If your question isn’t here, reach out—we’re here to answer.
