FINRA’s April 2011 announcements of its actions against two broker-dealers1 received substantial attention in the structured products industry. In particular, these actions provide useful guidance as to the types of issues that are of most concern to FINRA in connection with its review of the structured products sales process.
This article attempts to summarize the core issues presented in these two cases. The tables below describe the key issues that FINRA identified, and may be used to assist broker-dealers in their review of FINRA’s actions and whether they provide guidance for their operations. In some situations, changes or improvements may be advisable.
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A number of common themes emerge from the UBS Consent and the Santander Consent. In each case, FINRA reminded broker-dealers of the need for appropriate supervisory procedures, and potentially for more rigorous suitability determinations. As alleged mis-sales of structured products continue to receive attention in the mainstream press, it is possible that additional FINRA actions of this nature may arise.