Recognized in the Industry
Badge - AV Preeminent 2020
Badge - Best Attorneys of America
Super Lawyers
Badge - Badge - Avvo Rating 10.0 Top Attorney
Martindale-Hubbell Client Reviewed
Expertise - Best Employment Lawyers in New York City
Avvo Reviews
NYC Bar Association


Overconcentration occurs when your broker fails to properly diversify your portfolio. Failing to diversify your investments can be within different asset classes (type of security, i.e., stock, bond, mutual funds, cash, etc.) or various sectors (health care, financials, automotive, pharmaceuticals, consumer goods, technology, international, etc.). Additionally, if there is "overconcentration" in any one of those specific areas, or even in a single stock, it might be the reason for your losses. If you notice all your investments declined at the same time, it may be a clue that your portfolio is overconcentrated. A New York investment overconcentration law firm like Malecki Law can assess the concentration in your portfolio at no cost.

Asset Allocation, Concentration, and Diversification

Asset allocation is the makeup of your investment portfolio, involving different types of assets. Your asset allocation should be personalized, and dependent on various factors in your life. Three important factors your broker should consider are: your investment choices, your time horizon, and your risk tolerance.

  • Types of investments include stocks, bonds, cash, real estate, and commodities. Each type of investment choice presents its own risks, which a broker should take into consideration for you and your financial goals.
  • Time horizon is your expected number of months or years that you wish to invest. Your time horizon will impact the way your portfolio is set up. For example, an investor with a long-time horizon may be able to take on more risk than an investor with a short-time horizon.
  • Risk tolerance is your willingness to take on risk and your ability to incur losses. Risk tolerance is generally measured on a spectrum. There are three main categories of risk tolerance on this spectrum: (1) conservative, (2) moderate, and (3) aggressive. Multiple factors can be considered when determining where you land on the risk tolerance spectrum, including your age, financial goals, and overall comfortability with taking on risk.

Overconcentration means that your account may have too much of one security or types of security (like oil and gas investments, technology investments or financial stock, for example.) This creates a concentration risk that your broker must explain to you so that you understand it and then you need to consent to such risk. If you notice your portfolio is overly concentrated in one security or sector, your portfolio is likely overconcentrated. Malecki Law’s experienced New York investment overconcentration attorneys can have a sector analysis done and assess whether negligence has occurred.

If the potential concentration risk was not discussed, that may be a sales practice violation that can form the basis of a case against the broker and the firm. Concentration risks should be avoided because overconcentration can multiply the losses incurred in an investor’s portfolio. There are other factors that can lead to concentration risks, including concentration in illiquid investments, like private placements and REITs. Illiquid means there is no market for the activity of trading in an investment, so it will be very difficult – if not impossible to get out of an illiquid investment if you need the money for any reason – such as health issues, a home purchase, etc. 

Brokers should avoid potential concentration risks by appropriately diversifying their clients’ portfolios in different asset classes (such as stocks, bonds, cash, and mutual funds) and different sectors (such as Energy, Materials, Industrials, Utilities, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Communication Service, Information Technology, and Real Estate.) If you notice signs of overconcentration or minimal diversification, you may have a case. An investment overconcentration lawyer in New York at Malecki Law can review your account concentration in a free consultation. Moreover, as the market fluctuates and asset sectors increase, changing the portfolio balance, a broker should rebalance portfolios routinely to keep an appropriate mix and allocation of investments.

Diversification means that your investment portfolio is evenly distributed amongst various assets. This is to avoid concentration risks by putting all your eggs in one basket. If your investments do not seem to be evenly distributed in different types of investments and in different types of companies within your portfolio, it may be a clue that your portfolio is overconcentrated. You need a New York investment law concentration firm like Malecki Law to review your potential case.

Attorney Advertisement. Prior results do not guarantee a similar outcome.

Testimonials From Former Clients
I highly recommend Jenice and her team at Malecki Law. I had a challenging, and lengthly case. Jenice was professional, very knowledgeable, and a pleasure to work with. She managed to make the process far less stressful during a very difficult time. They care about their clients, and it definitely shows. Mario
Jenice is truly a miracle worker and one of the top securities lawyers. She handled a very difficult case for us, displaying her legal knowledge, intelligence, and savviness throughout the process. I cannot recommend her enough. The quality of work from her team rivals that of corporate law firms. She was always available, extremely professional, and made sure to know all the details of the case. We were very fortunate to have been referred to Jenice and highly recommend her for any securities related legal issues. Nathan A.
An excellent professional who represented us in trial regarding a bank fraud, an unexpected and difficult time. A professional that worked hard, persevering and who stood toe to toe against firms that had a team of excellent lawyers backing them up. Her unflinching determination really stands out, it makes you feel you have someone who really cares about trying to recover what you lost from the people that wronged you. Salomon Levi
It is difficult to thank you in words when gratitude comes from the heart, so I will try to link feelings with writing. It is essential for us to mention your excellence as a professional, your aptitude on legal fields, and your unavoidable persistence. All of these virtues that elevate the profession you exercise in such an admirable way, go hand in hand with your sense of ethics, your human warmth and the transparency in your actions. To sum up, thank you for being a listening ear and for having the right word while transmitting information about the legal process. Having you as our representative during such an adverse situation was a privilege and enough reason for our eternal gratitude. Angeles Aparain
To say that my securities litigation was complex would be a severe understatement. With multiple parties involved and spanning many years, trying to understand the issues was daunting to say the least. Jenice and her team broke down the transactions by segment and by party uncovering every hidden expense. In the end, I was more than happy and could not thank Jenice and her team enough. I would not hesitate to recommend Jenice to anyone. She is highly professional, incredibly knowledgeable, well connected to industry experts, has a tireless work ethic and is so pleasant and easy to communicate with. Five stars for sure! Andrew Loughrane