Structured Thoughts - Volume 2, Issue 5 - June 2011


In this issue: Principal Protected Note Tutorial from SEC and FINRA; FINRA Priorities; Why So Many Opinions? Exhibit 5.1 Opinions; Principles Applicable to Retail Structured Products Reaffirmed; Summary of Key Issues from Recent FINRA Fines; and more.

Excerpt from 'Principal Protected Note...':

The SEC’s Office of Investor Education and Advocacy teamed up with FINRA to publish an alert onprincipal protected notes titled “Structured Notes with Principal Protection:

The alert notes the growth in the structured products market and comments on the proliferation of products with different names and cautions investors to educate themselves regarding the risks inherent in principal protected products. It focuses on credit risk and on the limited secondary market and notes that principal protected products “have the potential to outperform the total interest payment that would be paid on typical fixed interest rate bonds.” However, the alert also warns against hidden fees. Overall, the alert should prove helpful to investors, but the presentation of fees may be more confusing than helpful and may serve as another indication that additional clarity on fee disclosures—from the basic notion of spreads and selling concessions, to the more complex notion of structuring fees—would benefit the market.

Please see full publication below for more information.1

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Published In: Administrative Agency Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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