SEC To Crack Down On Retail Sale of Complex Securities

The U.S. Securities and Exchange Commission has said that it is increasing its enforcement actions over the fraudulent sale of complex structured products to retail investors. The SEC stated that retail investors often lack the financial sophistication to understand the products and to detect fraud. The enforcement actions are coordinated by the SEC’s Complex Financial Instruments Unit, which investigates potential misconduct related to asset-backed securities, derivatives, and other complex financial products. This initiative appears consistent with the SEC’s current investigation into JP Morgan’s sales of in-house structured products.

The complex products that are the focus of the SEC’s efforts include derivatives, such as leveraged and inverse exchange-traded funds, equity-indexed annuities and principal-protected notes and other structured products that are linked to various assets or indexes. Part of the SEC’s efforts will include examining whether banks and brokerage firms are adequately disclosing the risks and nature of complex structured products.

If you believe you have been the victim of fraudulent sales, contactsecurities fraud lawyer at Dimond Kaplan & Rothstein for assistance. We have offices in Miami, West Palm Beach, Los Angeles and New York City.

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