Document Type
Article
Publication Date
1-1-1999
Keywords
suitability rule, investor diversification, spread, risk
Abstract
This article reviews the state of the law regarding actions against broker-dealers based on the NASD suitability rule and similar theories, summarizes the theory and practice of investor diversification, explains the motivations that may lead a broker to recommend excessively risky securities and investment strategies, and discusses the various methods that may be used to quantify or compare risk, focusing in particular on how the bid-ask spread may be used as a forward-looking surrogate for the direct measurement of risk.
Publication Citation
54 Business Lawyer 1599 (1999).
Disciplines
Securities Law
Digital Commons Citation
Booth, Richard A. Marbury Research Professor of Law, "The Suitability Rule, Investor Diversification, And Using Spread to Measure Risk" (1999). Faculty Scholarship. 102.
https://digitalcommons.law.umaryland.edu/fac_pubs/102