That's what happens with those full service brokers. They have salesmen pretending to be expert stock advisers. I was with Smith Barney for years. They were the same way. Now I invest with Schwab and have learned that investing is like any other job. You must know what your doing. By the way.....AOD is a joke.
Smasherstocks - part deau -
4. You purchased AOD on the offering or IPO ....hmmmm... Did you have experience buying INITIAL PUBLIC OFFERINGS ( IPOs ) in the past ? New stock / closed end offerings are typically considered most speculative and are normally excluded from conservative investors ...for that very reason.
5. Excessive commissions / fees - broker was paid $0.50 per share to solicit and complete the sale of AOD in your account plus the new issue registration fees / lawyers fees / exchange fees typically add another $0.25 per share to the cost of the fund ...so in essence ....you were paying $20 per share for something worth $19 or so ...how was that in your best interest ? Brokerage firms should be acting in your best interest as a fidicuary in many ways ...that could be considered a breach of fidicuary capacity ....( perhaps )
5.They knew they had screwed up ...and moved to cover their tracks ....By asking you to suddenly sign a suitability agreement that changed you from a conservative only investor...to a more adventurous investor ..they must have realized that the 70-80% raw loss ( unrealized ) on AOD was inappropiate for a conservative only guy ....so they changed the suitability ....AFTER THE FACT ...sort of like closing the proverbial barn door ...after the horse has run away ... and could be considered proof that " somebody " was worried or that your unrealized losses and percentage of losses were appearing on a risk management report somewhere ....hmmmm ...
6. Your trading experience ? probably as a " novice " or beginning level investor ....makes this type of " RUN & GUN " trading unsuitable ...even inside a fund ...what was your market experience back then ? Experience is a vital component in determining overall suitability ...did they take that into consideration ? hmmmm
Ok - thats the gist of your complaint ...not that you simply lost money ...you should NOT have been in the fund in the first place ....Unsuitability / Failure to Supervise /
Reply to Smasherstocks -
You dont literally sue the brokerage firm / broker in State or Federal Court since you signed an arbitration clause in your account agreement with A G Edwards and its successor firms ....but this may be good news for you since the arbitration process is simpler and does not require a lawyer ( still a good idea though ) and is much faster ( months...not years to litigate ) and the rules of evidence are not as stringent and the whole thing typically takes place in a hotel conference room ....its cheaper too.
Some points to consider both in favor of your claim and against it:
Favorable to lawsuit -
1. Y-charts is showing that AOD has a Total return of - 57.97% since inception ( ouch ) and compared to the S&P 500 index total return over the exact same timeframe of + 25.16% ....so the fund has vastly underperformed ( with dividends reinvested ) a typical general market index ....While the general market suffered an across the board hit in 2008-2009 of about -58% ...AOD failed to recover in any significant manner.
2. As a conservative investor, your broker should have known that the " dividend capture " tactics employed bythe fund management was extremely aggressive and speculative in nature and therefore inappropiate for your portfolio. Short term and rapid trading to capture dividends is ALWAYS speculative and therfore unsuitable for long term / conservative investors ...even when wrapped up in a mutual fund format.
3.Failure to supervise - As the market price of the fund slipped below 30% or $14 per share ...where was the brokerage firm management and or the broker ? Did they check in with you to see if you were OK with the looming financial disaster ? Did they offer alternatives including stopping your losses with a STOP order ? or simply going to cash in order to wait out the market storm ? OK ...when the fund price slipped below 50% of your purchase price ...what did they do ? ...60% ? 70% ? when did they plan on suggesting that you SELL?
Then what kind of lawyer do I need? Thanks for your reply. I would love to go after broker as I lost a lot of hard earned dollars on several buys they made costing me a ton of money when I was in a conservative account but they pushed all this high risk #$%$ to me. then they asked me to change my account to less than conservative.