Corporate & Securities Law

SNSFE is continuing its investigation of principal-protected notes following a report that the U.S. Securities and Exchange Commission is asking financial firms for information on how they market those principal-protected notes.  The SEC wants to know if investors in principal-protected securities are being misled into thinking the principal of their investment will not decline in value because of the name of the security.  The agency is also looking at how firms describe the risks associated with the products.

This year, Bank of America, Barclays, Citigroup, HSBC Holdings and JPMorgan Chase all have filed offering statements with the SEC to sell principal-protected notes that guarantee investors the return of either 95 percent or 100 percent of their initial outlay, even if the underlying investment does not pay off. 

In December, FINRA, the Financial Industry Regulatory Authority, issued a notice to firms reminding them that any "promotional materials" used to market principal-protected notes must be "fair and balanced" and not overstate the "level of protection."

Those with information concerning principal-protected notes should contact attorneys at SNSFE.

Source:  Reuters