Scott Martin has been covering the financial markets since 1996 and the securities business since 2001. He was a long-time columnist for Research, market writer at CNNfn.com, and editor of Buyside; his work currently appears in publications like The Trust Advisor, Institutional Investor, and EmergingMoney.com.| FINRA's Annual Regulatory And Examination Priorities Are Helpful To RIAs As Well As BDs And Their Registered Reps |
 |
| Monday, February 06, 2012 14:29 | ||
|
FINRA, in its annual letter to broker-dealers listing regulatory and examnation priorities, says private placements and enhanced-yield products, remain top concerns, but the list does not stop there. "Yield chasing," especially if it drives advisors into illiquid assets unable to support investor cash flow needs, along with mortgage-backed securities, muni bonds, non-traded REITs, If you're a private wealth advisor, please join Advisors4Advisors (A4A) to get its full benefits. Register now, and we will donate $20 of our $60 membership fee to Bubbles The Clown’s financial literacy program, and you can post an icon on your website saying you support Bubbles' 501(c)3 charitable organization. Plus, get other membership benefits, including:
complex and structured products, and private equity placements are all on FINRA's watchlist for 2012. As always, so are life settlements and variable annuities.
The FINRA list, incidentally, is as useful to RIAs as BDs and their registered reps. While RIAs are unlikely to get into selling mortgage-backed securities and other exotic instruments, it does happen. Scandals involving RIAs, once uncommon, seem to be in the headlines more often since the 2008 financial crisis. Knowing which alternatives are on FINRA's watchlist is wise -- especially if you think FINRA will be regulating RIAs in three years.
FINRA warns member firms about offloading responsibilities for information-technology security, social media compliance, and other functions to third-party vendors. Though these tasks can be outsourced, a broker-dealer is ultimately responsible to FINRA, of course.
FINRA also said it is seeing instances in which firms are "charging retail investors hidden, mislabeled or excessive fees" -- such as inflated postage bills -- and "recording expenses that are not the broker-dealer’s obligations."
Some firms have tried to write off employees' personal expenses and charge clients to cover it.
Comments (1)Write commentYou must be logged in to post a comment. Please register if you do not have an account yet.
|
I thought to myself, why the hell would an RIA firm allow a rep to place in an investor's portfolio. It was a Barclay's bank thing with a ridiculous yield.