Problem:

Barry is an investment advisor. He services around 50 clients with around Sl-2 million to invest. Barry mainly advises his clients to buy shares. This is because most of his clients already have a house worth an additional $1million and plenty of cash. Barry therefore feels that the rest of their portfolios ought to comprise primarily shares, even if the client is retired.

From time to time Barry gets a good tip and he passes that onto his clients. Recently Barry noticed that XY2 Limited's share price is dropping. Barry has a lot of shares in XYZ Limited. In order to prevent more losses to himself because of the fall in the XYZ share value, Barry sends an email to his clients recommending that the price of XYZ is good and that if they have spare money they ought to consider buying XYZ shares. Most of the clients respond to Barry's message by buying XYZ shares and the price of XYZ shares rises. Barry then sells all his shares in XYZ. One month later the price of XYZ shares falls again.

Barry's clients are upset. You discover that many of them do not understand the advice they have been given and that they are confused about B's interests and actions. Particularly the clients do not feel that they have all of the relevant information required from Barry at the time he made the recommendation to buy XYZ shares. Advise on the necessary points of law and other related financial planning matters that apply to this scenario.

Additional Information:

This question is from Finance and it explains a scenario where an investment advisor misleads his clients in investing in a company's shares whose prices have been falling. After his clients have bought the shares, they see that the share prices are indeed falling and want the right information. The solution advices about the laws that are have been enforced which help in taking financial decisions properly.

Total Word Limit: 783 Words