I was approached by my bank to invest in preferred stocks versus a cd market. The stock went from 25 dollars to 16 cents

Probably not. More facts and the precise nature of anything you signed would be helpful, but investment choices invariably include the "The foregoing includes foward-looking statements.....stocks may lose value....." and so on.

The essential nature of what happened, based on your limited facts is that they said "Hey, we really think this will take off. You should consider investing." Instead it went into the toilet.

Unless you can show they knew this would happen and hid it from you (some sort of fraud) or withheld material information they were privvy to then you likely do not have a cause of action.

There are securities lawyers that deal with this issue. I can't answer it but you should see such a law firm that handles these cases. The first answer from the other AVVO contributor, speaks to the issue of performance of the investment which of course cannot be guaranteed. I agree. However, placing an investor into a class of investments that is to risky for that investor, giving that investor's situation (age to retirement, net worth, need for present income etc) MAY be a cause of action. At least talk to a lawyer that handles suits against stock brokers and securities firms. My concern is that FDIC insured CD's are so much different (riskier) than stocks, even preferred stocks.


By the way check on the bank, too.

You may have an action, for a few reasons. First, bank holding companies have both banking and brokerage subsidiaries with each having their own "platform" for doing business, with the brokerage side providing higher overall revenue, and thus their justification for recommending you to purchase securities. When you went to the bank, you were asking for a bank product, not an investment - the bank was your fiduciary and had a responsibility to recommend only appropriate bank products - the recommendation to invest your money and not purchase CDs was simply not appropriate. Second, it sounds like the broker misrepresented the initial product (i.e., the boast of 8 1/2%). The problem you face is that your purchase through a broker-dealer will more likely require you to arbitrate you case before FINRA.