In June, FINRA announced that it ordered Wells Fargo Advisors, LLC and Banc of America/Merrill Lynch to reimburse customers more than $3 million and fined the two brokerage firms more than $2 million for selling unsuitable securities to hundreds of investors. FINRA found that the brokerage firms sold risky floating-rate bank loan funds to hundreds of investors were seeking to preserve principal or who had conservative investment objectives.

Floating-rate bank loan funds generally invest in loans whose credit quality is rated below investment-grade, reflecting the risky nature of the loans. The funds are subject to significant credit risks and can also be illiquid. FINRA also found that the brokerage firms failed to train their brokers regarding the unique risks and characteristics of the funds, and failed to reasonably supervise the sales of floating-rate bank loan funds.

Investors seeking greater rates of return in this low-interest environment need to be cautious about investments that promise greater rates of return. The risk-reward paradigm applies to investments. That is, investments that provide greater the potential financial reward generally involve greater risk of loss. Investors should be wary of any representations that a high-return investment has only low risk.

EN   ES   PT     

Miami Office
Grand Bay Plaza
2665 S. Bayshore Drive
Penthouse 2B
Miami, FL 33133
Telephone: 786.628.8236

Los Angeles Office
Available by Appointment
2029 Century Park East
Century Plaza Tower
Suite 400N
Los Angeles, CA 90067
Telephone: 424.544.7930

New York City Office
Available by Appointment
14 Wall St, 20th Floor
New York, NY 10005
Telephone: 917.382.5217

West Palm Beach Office
Northbridge Centre
515 N. Flagler Drive, Suite P-300
West Palm Beach, FL 33401
Telephone: 561.475.2887

Detroit Office
41000 Woodward Avenue,
Suite 350 East
Bloomfield Hills, Mi 48304
Telephone: 248.368.0182