In January 2016, FINRA issued an investor alert (http://www.finra.org/investors/alerts/high-yield-cd-offers) warning brokerdealers regarding improper promotions of high-yielding CDs. In some cases, these promotions are not being used by these brokers to actually sell the CDs; instead, they are using the promotions to lure investors into purchasing a different, high-commission product, such as a fixed or equity-indexed annuity.
FINRA issued the alert based on calls made to its Securities Helpline for Seniors (1-844-57-HELPS (1-844-574-3577)).
In the alert, FINRA advises investors to be cautious about these types of offers. Investors who contact the broker about the high-yielding CD end up being invited to the broker’s office to hear a sales pitch about a completely different product. The alert also describes different variations of this “bait-and-switch.”
Needless to say, careful FINRA member firms monitor the sales activities of their personnel to prevent these types of activities.