On August 24, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations’ National Examination Program staff (Staff) released a Risk Alert summarizing findings from an examination of 10 broker-dealers (Firms). The Staff evaluated whether the Firms effectively supervised and monitored the risks and activities associated with sales of structured securities products (SSPs) to retail investors.
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The examinations revealed significant deficiencies in all of the Firms, including that they failed to maintain and enforce adequate controls to determine suitability of SSP recommendations. The Staff noted that the Firms’ written supervisory procedures related to reviews of representatives’ determinations of customer suitability were also deficient and the Staff cited all of the examined Firms for such deficiencies.
Click here to read the Risk Alert.