A report by the Securities and Exchange Commission (SEC) revealed some mispractices by broker-dealers in selling structured securities products. For the study, the SEC looked closely at eleven broker-dealers.
The SEC reported that that broker-dealers may have recommended unsuitable structured securities products to retail investors, traded at prices disadvantageous to retail investors, and omitted material facts about structured securities products offered to retail investors.
The report also included potential supervisory deficiencies, specifically a lack of training requirements for supervisors and registered representatives of the structured products.
“Sales of structured products to retail investors have increased over recent years and may continue to increase as they are marketed as a higher return investment alternative,” said SEC Director of the Office of Compliance Inspections and Examinations Carlo di Florio. He continued, “This report could help companies strengthen their compliance programs to better address the issues we observed during our sweep and in subsequent exams.”
The SEC, di Florio also stated, will continue to monitor the products beyond the completion of this report for “investor protection.”
For the full report, please click here.