Class actions: FINRA/NASD Compliance!

Implications: Is steering a common practice with brokers/dealers?Will simply stating your investment has a risk be enough to shield brokers/dealers?

Analysis: People are clearly aware the market has risk, but where does the line begin to blur from the sophisticated user to a novice consumer.  The problem that has been unfolding for a long time is that many brokers/dealers highlight products to which they may receive the best commission and/or profit. While most emphasize all investment has risk, does this somewhat inherent conflict create a Pandora's box for those who have guided the investing. How can you really be objective if you have a financial interest in the transaction?  Like with the contingent commission issue in the insurance industry, brokers/dealers may start facing more and more class action lawsuits for at the very least possible full disclosure or greater responsibility for what some seem to be a little heavy push towards investments that have greater benefit for the institution. After all, after the sting of Enron, Worldcom & others, and the push for corporate compliance & access to a bail out for the investor thru a lawsuit has been in some situations much easier and almost automatic. Suits like Amerprise & Metlife have been a road map for likely additional suits involving compliance and full disclosure.  Importantly, the court system should not be a bailout for poor investment decisions, but a true place to seek redress for improper tactics.  With the market being what it is, brokers and dealers need to tread a little more lightly into guidance that has been the subject of so much recent litigation: a fiduciary's responsibilities. http://www.investopedia.com/articles/08/fiduciary-responsiblity.asp