The Securities and Exchange Commission (SEC) has issued warnings regarding structured products and reverse convertible notes, Reuters reports. After examining 11 broker-dealers, the SEC found that the firms may have recommended complex products not suitable for clients.
It also found that broker-dealers charged prices that were too high, did not disclose risks related to them and misrepresented them on customer account statements. The agency has proposed that broker-dealers should improve disclosure about structured securities products, set up procedures and controls to prevent abuses in the secondary market and arrange specialized training for representatives who sell the instruments.
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