The SEC’s Office of Investor Education and Advocacy teamed up with FINRA to publish an alert on principal protected notes titled “Structured Notes with Principal Protection: Note the Terms of Your Investment” on the SEC’s website at http://www.sec.gov/investor/alerts/structurednotes.htm.

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.