Client Alert
The Financial Industry Regulatory Authority, Inc. recently issued guidance to members concerning the supervision of complex products — securities or investment strategies with novel, complicated, or intricate derivative-like features such as structured notes, inverse or leveraged exchange-traded funds, hedge funds, and securitized products. FINRA believes that such features may make it difficult for retail investors to understand the essential characteristics of complex products and their risks. As discussed below, FINRA also identified characteristics that may render a product “complex” for purposes of determining whether such product should be subject to heightened supervisory and compliance procedures.
