Answer: They both are a poisonous Adam’s Apple.
Here is what to do if you ate the apple as a result of a financial advisor:
When interest rates are low, as they have been for years now, retirees, widows, and orphans who rely on their investments to pay for day-to-day expenses like rent, mortgage, gas, utilities, medicines, doctors, etc., often are misled by stockbrokers who commit stockbroker malpractice by improperly focusing their clients on high-dividend stocks to meet such needs. This misleads such investors into believing these are safe, suitable investments for those who rely on their investments to survive day-to-day.
As one can see from the recent debacle in CenturyLink (CTL) shares, the phone, cable, and Internet company worth $14 billion collapsed overnight on February 13, 2019, after it cut its attractive dividend from $2.16 a share to $1.00 a share or from about a 15 percent dividend per year to half of that overnight. Added to the carnage for those invested in CTL is that the stock price also collapsed as a result of the cut from about $15 to $13 per share, which is classically what occurs after a sudden cut to a stock dividend.
Similarly, supposedly “safe” General Electric (GE) cut its dividend two times over the last two years down to a single penny—all the while with the stock price also collapsing into single digits. Those on fixed income who relied on CTL as an investment suddenly not only are now receiving half of what they expected in income, but their underlying investment is down, substantially endangering their ability to continue to pay their bills. Far too many negligent investment advisors simply seek out high-dividend-paying stocks to recommend to their clients without regard to the likelihood that such dividends can be sustained.
A broker’s failure to conduct due diligence with regard to such stocks or failure to provide full disclosure regarding the potential cut of such a dividend and the share price to an investor with little personal investment experience can be considered unsuitable and thus a violation of securities laws even if they fully agreed to the investment, as the focus of suitability concerns is on the recommendation itself, rather than the authorization.
Any investor who, as a result of recommendation from their broker/investment, was overly concentrated in CTL or any other similar stock, and who relied on their accounts for which to pay their bills, etc., should seriously consider contacting an attorney whose focus is on FINRA arbitrations and suing brokerage firms for reimbursement, as we have for almost two decades now, without ever having lost any in-person arbitration*,confounding all statistics in investor claims.
For a free phone consultation, contact Meissner Associates and Mr. Meissner toll-free at 866-764-3100 or online.We accept cases all across the country and the world.
**Disclaimer: Prior results cannot and do not guarantee or predict a similar outcome with respect to any future matter, including yours, in which a lawyer or law firm may be retained. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.