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SEC Warns Brokers on Structured Notes

SEC Warns Brokers on Structured Notes

Risk alert. | Copyright Chip Somodevilla, Getty Images

The Securities and Exchange Commission is warning broker/dealers that their guardrails around selling so-called structured notes are, almost without exception, weak. The commission issued a risk alert after reviewing sales of over 26,000 structured notes – usually debt obligations tied to options contracts – totaling over $1.25 billion in principal, at ten branch offices. All firms examined failed to make sure the investments were suitable for their clients. “Representatives within one branch in particular were aggressively recommending SSPs to customers while appearing to mischaracterize the underlying attributes …particularly to non-English speaking investors,” the SEC said. It also noted that in a few cases it was mostly the elderly that were sold the notes; in at least one case, the investor was a workplace benefit plan. Many of those notes were liquidated at “well below” face value shortly after being sold to the retail clients, the commission found.

Advisors Cashing in on State and Local Governments

Mmm ... pie. | allanswart/iStock/Thinkstock

U.S. state and local governments pay about $4 billion in fees annually when they sell bonds to the public, and a large piece of the pie is going to financial advisors, according to a new study. The report, which reviewed 812 offerings around the country between 2012 and 2015, covered a broad spectrum of small to large government expenses. While underwriting accounted for the largest single expense at 46 percent of the annual cost, advisors received 14 percent. Bond attorney costs and fees for municipal-bond ratings accounted for 15 percent and 8 percent respectively. The research was competed by Marc Joffe for the Haas Institute for a Fair and Inclusive Society, a policy center at the University of California at Berkeley.

Hurricanes a-Comin'

Hunker down. | Copyright Getty Images

With the height of hurricane season approaching, advisors should work out plans with clients in case of an emergency, as unprepared consumers are among the most financially vulnerable, according to the National Foundation for Credit Counseling. There are more than 6.6 million homes situated on the Atlantic and Gulf costs that are at risk during the 2015 hurricane season, with a total reconstruction value of nearly $1.5 trillion, estimates CoreLogic. Of those at risk, the Tampa and St. Petersburg, Fla. metropolitan area is the most vulnerable to storm surge flooding, according to a recent report by Karen Clark & Company. The potential loss there is about $175 billion. The NFCC recommends consumers along the coast review their insurance coverage, have cash on hand and a rent a safety deposit box to store important documents, including a complete household inventory.

Robin Williams Estate Battle Just Spinning Its Wheels

Just pedaling around. | Copyright Joe Raedle, Getty Images

When an estate battle breaks out, often every little item on an estate's list can become grounds for a fight. The feud over Robin Williams’ estate between his widow and children is a case in point. As reported by ABC News, Williams collected bicycles, valued now in the millions of dollars. Theoretically, dividing this asset would simply require some math. But when fights turn bitter, tangible objects develop an additional “emotional value” they lacked previously, particularly once another party in the estate battle expresses an interest in them. The two sides are heading to mediation this week to resolve these personal property issues, among others.

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