Apple’s Falling Stock Price Causes Further Damage to Reverse Convertible Notes Linked to Apple

Reverse convertible notes linked to Apple stock have been popular investment products in recent years because they appear to provide above-average yields and resemble corporate bonds. As noted in previous posts though, reverse convertible notes (RCNs) are complex derivative investments that are rarely suitable for retail investors. To the average investor, RCNs resemble short-term corporate…

FINRA’s Proposed Changes to BrokerCheck Helps Investors

FINRA has proposed a new rule regarding its BrokerCheck system, which gives investors access to information about a financial advisor’s business and disciplinary history. The new rule would “require its broker-dealer members to include a prominent description of, and link to, BrokerCheck…on their websites, social-media pages and any comparable Internet presence.” Under this new proposed…

Multinational Corporation Sues Credit Suisse Over Auction Rate Securities…Start of a Pattern?

STMicroelectronics NV (STMicro), Europe’s largest computer chip maker, has sued Credit Suisse for “allegedly placing $450 million of its cash into auction-rate securities (ARS) without authorization.” STMicro believes that more than $2 billion of its money was invested in these ARS, without authorization. The complaint alleges that STMicro thought its cash was being invested in…

Former Jefferies & Co. Executive Charged with Defrauding Investors

On January 28, 2013, the SEC charged Jesse Litvak, a former executive of Jefferies & Co. a New York based broker-dealer, with defrauding investors in a mortgage-backed securities (MBS) investment scheme. According to the SEC’s complaint, Litvak allegedly purchased MBS investments from some customers of Jefferies & Co. and subsequently sold the investments to other…

Leo Wells, Head of Atlanta-Based Wells Real Estate Funds (REITs), Throws in Towel

Atlanta’s Leo Wells, head of Wells Real Estate Funds, will not be “register[ing] any new investment products” for the time being. Leo Wells is one of the most well-known, outspoken, issuers of non-traded REITs. Thus, his timely “pause” from the industry is noteworthy. Leo Wells cites the lack of regulatory clarity, marketplace clarity, and uniform…

FINRA’s 2013 Focus Areas

On January 11, 2013, FINRA released its regulations and priorities examination letter. This annual letter serves as a notice to the industry on what FINRA will be focusing on in the coming year and what it sees as heighten risk areas. According to FINRA’s letter, “FINRA is particularly concerned about sales practice abuses, yield-chasing behaviors,…

Pruco Securities, LLC Ordered to Pay Restitution and Fine for Improper Pricing of Investments

On December 26, 2012, FINRA ordered Pruco Securities, LLC to pay $10.7 million in restitution, plus interest, and a $550,000 fine for inaccurately pricing mutual funds. The firm was charged with having an inadequate supervisory system and procedures in place to detect the problem. According to the SEC website, Pruco’s retail brokerage business, COMMAND, mishandled…