FINRA Investor Alert: Closed-End Fund Distributions
(Nov 2013)
The Financial Industry Regulatory Authority (FINRA) recently released an Investor Alert to draw investors attention to the subtle difference between distributions and returns in the context ofclosed-end funds. Closed-end funds are pooled investments like mutual funds (which are also known as 'open-end funds'), but have only a fixed number of shares. This distinction has a big impact on how the fund is analyzed.
Distributions from closed-end funds are typically quoted as a rate (e.g. 6%). This...
FINRA Investor Alert: Private Placements
(Sep 2013)
Many of the riskiest financial products we have seen are sold as private placements. Generally speaking, private placements are investments sold directly to accredited investors, and are not registered with the SEC. Private placements include hedge funds, oil and gas partnerships, private real estate investment trusts, and other speculative investments.
Yesterday, FINRA released an Investor Alert on private placements. In it, they warn investors that sales abuses and even fraud have been...
FINRA Issues Investor Alert on Alternative Funds
(Jun 2013)
The Financial Industry Regulatory Authority (FINRA) recently released an investor alert entitled "Alternative Funds Are Not Your Typical Mutual Funds". FINRA defines Alternative (Alt) Funds as mutual funds that "seek to accomplish the fund's objectives through non-traditional investments and trading strategies."
These funds have garnered significant assets in recent years -- over $175 billion as of May 2013 -- as investors stretch beyond traditional stock and bond allocations for additional...
SEC and FINRA Issue Investor Alert RE: Year-End Investment Considerations
(Dec 2012)
Late last week, FINRA and the SEC's Office of Investor Education and Advocacy issued an investor alert encouraging investors to take stock of their investments and finances at year-end. This alert is rather brief, but offers sound advice to prevent disputes that could lead to the kind of arbitration or litigation we see every day.
In particular, the two regulatory bodies suggest reviewing asset allocations and consider rebalancing. Conventional wisdom tells us that investing in more than one...
State Securities Administrators Issue List of Top Ten Investment Scams
(Aug 2012)
The North American Securities Administrators Association (NASAA) has just published its annual list of the most prevalent scams. Among the usual suspects (oil and gas drilling programs, real estate fraud, precious metals) is a warning about "inappropriate advice or practices from investment advisers." Bernie Madoff was a registered investment adviser (RIA). His fraud has drawn significant scrutiny to an industry not accustomed to the attention.
The registered investment advisory business is...
Many ETF Issuers Consolidating Offerings
(Aug 2012)
As inflows to ETFs have exploded over the past few years, many issuers expanded their lineup of funds to take advantage of the increased investor interest. Some have tried to compete with established funds by creating funds with very similar exposure, while others have offered highly specific investment strategies in an attempt to capture a niche market.
In general the ETF market has exhibited a 'winner take all' pattern whereby the oldest and largest funds attract by far the most investor...
FDIC Warns Investors about Structured CDs
(Jul 2012)
Earlier this year, the Federal Deposit Insurance Corporation issued a warning about structured certificates of deposit (CDs), which are hybrid investments combining features of both traditional CDs and structured products. FINRA has also recently investigated the market for structured CDs, which has been estimated to be as large as $30 billion.
Structured CDs are essentially bank deposits whose interest payments depend on the value of a reference index instead of a predefined fixed or...
FINRA Investor Alert: Asking the Right Questions
(Jul 2011)
The Grass Isn't Always Greener-Chasing Return in a Challenging Investment Environment
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert to help retail investors, who are seeking for higher returns through investing in complex securities such as structured products, ask the right questions before making such investment decisions.
Investors are encouraged to read through the FINRA article. The article includes a section on 'Structured Retail Products', since...
FINRA Investor Alert: Stock-Based Loan Programs
(May 2011)
Stock-Based Loan Programs: What Investors Need to Know
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert on the risks and rewards of non-recourse stock-based loans, loans which are given to borrowers who pledge fully paid securities as collateral to the lenders. This collateral is the only recourse the lenders have with which to reclaim the loans from the borrowers. The lender holds the securities during the period of the loan and returns them - with profits...
FINRA Investor Alert: Reverse Mortgages
(Nov 2010)
Reverse Mortgages: Avoiding a Reversal of Fortune
The Financial Industry Regulatory Authority (FINRA) issued an Investor Alert to help investors make informed decisions on whether or not to take out a reverse mortgage. A reverse mortgage is a loan that is secured by the equity of the borrower's home. A reverse mortgage converts the equity into cash and the loan is paid off when the borrower dies or moves out and sells his or her home.
Investors should beware of a few things. Firstly,...
