Be Careful When Considering Municipal Bonds

Post by Alan Perry on

A recent Wall Street Journal column advises money managers not to put more client money in municipal bonds. The column sets forth a number of risks and problems that it urged money managers to consider before placing clients’ money in these investments. First, municipal bonds’ tax-exempt status may be in political jeopardy (“Morning Call: Advisers […]

Regulators Focus on Complex Alternatives

Post by Alan Perry on

The Financial Industry Regulatory Authority (FINRA), as well as the SEC and state regulators, have announced that they are concerned about broker/adviser sales practices involving alternative investments including variable annuities and equity-indexed annuities. They have the distribution of these complex products on their radar screens.  On January 11, 2013, FINRA sent a letter to its […]

Investors are Gorging on Junk Bonds

Post by Alan Perry on

Prices of “junk” bonds keep rising as investors continue to buy the riskier debt.  Yields on junk bonds, which move inversely to bond prices, settled at a record low of 5.56% recently.  Demand for junk bonds is part of the yield-seeking behavior recommended by advisers to many fixed income investors, as they venture further out […]

Financial Crimes – How Should We Deal With Them?

Post by Alan Perry on

Has the government gone too far in ignoring financial criminal conduct? Is the United States operating under an unspoken policy to refrain from prosecuting large financial institutions even if they believe criminal laws were violated? Are the regulators afraid that doing so might damage the economy? Those questions were raised in a recent Wall Street […]

Structured Products Pose Major Risks for Investors

Post by Alan Perry on

Danger lies ahead for investors in structured products. Structured products were once used only by institutions and sophisticated investors that had the education, training and experience needed to fully understand these complex and opaque alternative investments.  Over the past several years, however, structured products have been sold to individual investors, who do not understand the […]

The Games That Mutual Funds Play

Post by Alan Perry on

OppenheimerFunds  Inc. has agreed to pay more than $35,000,000 to settle SEC charges that it  made misleading statements about two of its mutual funds during the credit crisis.  The payments include a penalty of $24,000,000, disgorgement of $9,879,706, and prejudgment interest of $1,487,190. According to the SEC, Oppenheimer used total return swaps (a type of […]

Illinois Settles SEC Fraud Charges

Post by Alan Perry on

The SEC has charged the State of Illinois with securities fraud for misleading municipal bond investors between 2005 and early 2009.  According to the SEC, Illinois failed to disclose the impact of structural underfunding of its pension system in connection with the offer and sale of more than $2.2 billion worth of municipal bonds.  The […]

Alternative Investments in the Regulators’ Headlights

Post by Alan Perry on

Regulators say they are continuing to focus on sales of complex alternative investments, including structured products, hedge funds and private-equity funds.  The combination of persistent low interest rates and stock market volatility has led to investors being pushed into alternative products, and they are “a hot topic” with regulators. See White Paper on Alternative Investments […]

Broker Barred for Ripping Off Pro Athletes

Post by Alan Perry on

The Financial Industry Regulatory Authority (FINRA) has barred broker Jeffrey Rubin of Lighthouse Point, Florida, from the securities industry for unsuitable recommendations to NFL players to invest in the securities of a now-bankrupt Alabama casino. The NFL players lost millions in the illiquid, high-risk investment. According to FINRA, Rubin made the recommendation to at least […]

Aging of Population Raises the Bar for Advisers

Post by Alan Perry on

The problems of elder financial abuse and loss of cognitive faculties due to aging are on a steep upward trend. The inability to manage money and make sound financial decisions is one of the earliest indications of Alzheimer’s disease.  Financial advisers should look out for clients who stop paying bills, seem addled about their assets, […]