A veteran financial advisor with Stifel Nicolaus & Co. Inc. is facing a rash of investor complaints stemming from the sale of structured notes, the performance of which is typically tied to an underlying asset, such as a specific stock or an index like the S&P 500 stock index.
According to an article in InvestmentNews, Miami Beach, Florida-based Chuck Roberts is a 33-year industry veteran and has worked at Stifel since 2016, according to his BrokerCheck report. He’s facing eight investor claims totaling $23.5 million in damages. The customer complaints claim breach of fiduciary duty, negligence, fraud, breach of contract, and other allegations, with six filed in May and one each in June and last October.
James Sallah of Sallah Astarita & Cox, LLC is representing an investor in an arbitration against this broker. James Sallah is quoted in the article – “Roberts ‘was buying and selling structured products nonstop,’ said James Sallah, a plaintiff’s attorney working with one of the investors suing the financial advisor. “I’m not sure how big a producer he was, but our client was a multimillion-dollar customer.””
Structured notes are financial instruments that exhibit a hybrid nature, combining characteristics of both bonds and derivatives. These notes can be subject to volatility due to their complex structure and dependence on various underlying assets.
Structured notes come in different varieties. Some are designed with principal protection, providing a certain level of safety for investors’ initial investment. In such cases, even if market conditions are unfavorable, investors are assured that their principal amount will be preserved.
However, not all structured notes come with principal protection. In instances where the note lacks this safeguard, investors face the risk of losing a portion or even the entirety of their principal, depending on the specific terms of the note and prevailing market volatility.
The unique combination of bond-like features and derivative-like exposures makes structured notes appealing to some investors seeking potential gains from market movements and specialized strategies. However, the complexity and inherent risks associated with these instruments mean that they may not be suitable for all investors.
As with any investment, thorough due diligence is essential when considering structured notes. Investors should carefully assess the terms and conditions, risk factors, and potential returns associated with a particular note. It’s crucial to understand the underlying assets and how they may be impacted by changes in market conditions.
While structured notes offer a distinctive investment opportunity, their complexity and exposure to market fluctuations warrant cautious consideration. Brokers need to be sure that their investors are well-informed and prudent when navigating the world of structured notes.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.