SIFMA Complex Products Forum

On October 29th, GMG Regulatory and Compliance members – Eric Blackman and Brad Nassau will be speaking at the SIFMA Complex Products Forum in New York.  The Complex Products Forum is a collaborative event that brings together regulators, distributors, and manufacturers to discuss the issues, challenges, and opportunities related to the sale of complex products to individual investors.

Complex and high-yield products have become one of the most important areas for financial-industry regulators, and the prospect of more enforcement actions has raised the stakes for compliance departments.  In 2012, FINRA issued guidance on heightened supervision of complex products. Such products are not defined, but their principal characteristics are stated as containing multiple features which affect the return under various scenarios.  Examples of such products include asset backed securities (ABS) secured by a pool of collateral such as mortgages, credit cards or music royalties, inverse and leveraged ETFs, hedge funds and securitized products.

Regulators are requiring that financial institutions conduct a reasonable basis suitability assessment before recommendation.  A firm should have procedures to ensure representatives do not recommend a product to investors before vetting suitability.  Risks to investors include limited liquidity, as products are often unlisted, and continuing credit exposure to the issuer.

Eric Blackman will be on a panel focusing on the importance of customer suitability, financial advisor and investor education, and due diligence in the sale of complex products to individual investors.  Brad Nassau will be on a panel addressing regulation, compliance and responsibility of firms when creating and distributing complex investment products to meet the financial needs of individual investors.

For more information on the conference, please click here.

Gartland & Mellina Group — A Management Consulting Company