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Recovering Illiquid Alternative Investment Losses after the Coronavirus Market Crash

The coronavirus market crash in March 2020 had a significant impact on investors across the U.S. Countless investors endured considerable investment losses due to unsuitability, overconcentration, structured products, margin calls, and illiquid alternative investments.

Alternative investments are often not suitable for many investors, and if your broker failed to inform you of the risks of alternative investments, you may be able to recover the losses you suffered in the coronavirus market crash. Read on to learn more about alternative investments and how you can go about seeking full recovery of your losses.

Alternative Investments: What You Need to Know

Alternative investments are unlike conventional investments (e.g., stocks, bonds, cash) in that alternative investments are often illiquid and not available to nonaccredited investors. When securities are illiquid, it means that they cannot be sold on demand. 

Unfortunately, many financial advisors recommended alternative investments to their clients, assuring them that they would provide liquidity more quickly than they actually would. These non-traded REITs, private placements, and other alternative investments have been sat on for years by retail investors. 

When the market crashed due to the coronavirus pandemic, some retail investors began to look for liquidity so they could support themselves and their employees. But the assets in question are illiquid, leaving investors with nothing to continue supporting their own expenses or to compensate their staff.  

Alternative investments are not illegal, but when your broker misrepresented the investment, overconcentrated your investment portfolio with illiquid alternative investments, or sold you an alternative investment as a nonaccredited investor, you may have an arbitration complaint on your hands. 

How You Could Recover Your Investment Losses

If your stockbroker or financial planner over-recommended illiquid alternative investments to you, and you lost money when the stock market crashed in March 2020, you may be able to recover the losses you endured by pursuing a FINRA arbitration claim.

The Financial Industry Regulatory Authority (FINRA) oversees the conduct and misconduct of all registered brokers and broker-dealers across the country. If you choose to proceed with initiating a FINRA arbitration complaint, you can expect to have your case heard by one or three arbitrators, depending on how significant your losses were. 

Once your evidence has been presented and the respondent has had the opportunity to justify their reasoning in recommending illiquid alternative investments, the arbitrators will then review all of the evidence before coming to a decision. 

If the FINRA arbitrators come down in your favor, the respondent will be ordered to compensate you within 30 days of the decision being made. For this reason, FINRA arbitration is often an attractive option for investors who have lost money due to broker misconduct or negligence. 

Contact an Experienced Investment Loss Lawyer

If you lost money due to illiquid alternative investments when the stock market crashed due to the coronavirus concerns, reach out to a respected investment loss lawyer at Wolper Law Firm. You can fill out the online contact form we have provided below or give our office a call at 800.931.8452 to schedule a free, confidential consultation. 

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]