Exposing an Investment Portfolio to Concentration Risk May Result in Substantial Losses

According to FINRA, "a diversified portfolio tends to be harder to achieve than simply following the mantra: don't put all your investment eggs in one basket. This basic strategy can help, but it is often not enough to avoid concentration risk—the risk of amplified losses that may occur from having a large portion of your holdings in a particular investment, asset class or market segment relative to your overall portfolio."  See Concentrate on Concentration Risk.  For example, an investor should carefully evaluate a recommendation by a licensed securities broker or registered investment advisor to purchase or hold a significant amount of one particular stock due to a belief that the stock may ultimately perform well in the future.  A recommendation of this nature may be unsuitable in light of the investor's investment objectives, risk tolerance, and overall financial picture.   

Over the past couple of years, Tampa Bay area investors may have relied on the recommendation of a registered investment advisor to devote a substantial portion of their respective portfolios to a single stock, namely, Novavax, Inc. (NVAX).  The recommendation was made from mid 2014 to mid 2015. Novavax is a clinical-stage vaccine company.  In September 2016, the company announced that a Phase III trial of its RSV (Respiratory Syncytial Virus) vaccine had failed to meet its endpoints, which caused its share price to fall from $8.34 to $1.40 and led the company to lay off 30% of its employees.  Investors who devoted a substantial portion of their portfolios to this single stock have suffered significant losses.   If you followed the recommendation of your securities broker or registered investor advisor to dedicate a large portion of your holdings to NVAX stock, you may have legal remedies available to you that may permit the recovery of your investment losses.  Please contact Joel Ewusiak for legal assistance with your particular matter.