05.17.22
Broker-Dealers Face Risks Aplenty, Regulators Warn
by: Bruce Kelly
Broker-dealers should be extremely sensitive to the risks posed by inappropriate record keeping and communications, the need to keep track of brokers who require heightened supervision and the ever-looming specter of complex products sold to retail customers, according to securities regulators who spoke on the “enforcement developments” panel Tuesday at the Financial Industry Regulatory Authority (FINRA) annual meeting. Melissa Hodgman, associate director of division of enforcementat the U.S. Securities and Exchange Commission (SEC), pointed to a $125 million settlement the SEC reached in December with JPMorgan Chase over employee communications as a wider heads-up for the securities industry. Another regulator, Jessica Hopper, executive vice president and head of enforcement at FINRA, raised concerns about whether firms and brokers understand “alternative” mutual funds. “We have retail investors who suffered 80% losses on their investments, and the firm was responsible for understanding what they were selling,” Hopper said.
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