05.19.26
FINRA Targets High-Risk Structured Notes in Regulatory Sweep
by: Mason Braswell
The Financial Industry Regulatory Authority (FINRA) is examining high-risk structured notes, especially non-principal-protected “worst-of” products, in a regulatory sweep assessing whether brokerage firms properly supervise sales and comply with the U.S. Securities and Exchange Commission Regulation Best Interest standard. The review focuses on concentration risks that have led some investors to lose large portions of portfolios and on whether firms have adequate controls, training and surveillance for complex derivatives-linked products. FINRA is requesting data from 2022–2025, including compensation incentives, alerts and supervisory approvals.
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