Category Archives: Suitability
Investor Education: Suitability Rule
Every brokerage firm, investment advisor, and broker is required by securities rules to “know their customer,” so they can make appropriate recommendations given the investor’s age, net worth, risk tolerance and goals. FINRA Rule 2111 also known as the “Suitability Rule” requires that firms and their brokers have a reasonable basis to believe that… Read More »
SEC AND FINRA ISSUE INVESTOR ALERT ON STRUCTURED NOTES WITH PRINCIPAL PROTECTION
The SEC and FINRA have issued an investor alert to educate investors about the risks of structured notes with principal protection. These products, notwithstanding their names, have substantial risks. Structured notes with principal protection have a zero-coupon bond – which pays no interest until the bond matures — with an option or other derivative… Read More »
NFL Players – Targets of Broker Abuse
NFL players are finding themselves abused by brokers with bad investments in Ponzi and other fraudulent schemes. Hall of Fame Quarterback, John Elway, recently disclosed that he and his partner gave $15 million to a hedge fund manager, who was allegedly running a Ponzi scheme. New Orleans Saint, Alex Brown, sued his financial advisors… Read More »
Investors Seek Uniform Fiduciary Duty Rules
Though the Securities and Exchange Commission have yet to set a universal standard of care for brokers and investment advisers, one thing is certain: Investors want a single standard. Out of 1,319 investors polled, over 90% of investors want a broker and investment adviser to have and follow the same fiduciary duty and investor… Read More »
FINRA Orders Raymond James to Pay $925,000 to Couple
Raymond James & Associates, Inc., and one of the brokerage’s advisers must pay $925,000 in damages to a Texas couple that purchased auction rate securities in 2008, a securities industry regulatory panel has ruled. The Financial Industry Regulatory Authority panel awarded the damages to Rex and Sherese Glendenning, a Texas couple that originally sought… Read More »
FINRA Issues Regulatory Notice 10-22 on Regulation D Offerings for Private Placements
FINRA recently issued a regulatory notice on Private Placements, reminding broker-dealers of their duty to conduct reasonable investigations in recommending investments in Regulation D offerings. The notice provides that any broker-dealer recommending securities under Regulation D must the suitability requirement under NASD Rule 2310 and must comply with the advertising and supervisory rules of… Read More »