Targeted Examination Letters

July 2009

 

Re: Structured Products Review

 

FINRA is reviewing the sale of structured products to investors. In connection with this review, we request the following information for the period of January 1, 2007 to May 31, 2009 ("the review period"). Please provide all documents relating to this request no later than August 24, 2009.  Your response should be accompanied by a list or an index that identifies each piece of information to the product and item number to which it relates.

 

In connection with this review, we request the following, broken down by product:

 

  1. In Excel spreadsheet format, for each product sold by your firm during the review period:;
    1. Column A: Product name;
    2. Column B: A brief description of the product;
    3. Column C: Due date/ maturity date of each product;
    4. Column D: Total number of units sold;
    5. Column E: Total dollar amount invested;
    6. Column F: Total number of customers purchasing the product;
    7. Column G: If the product has passed its maturity date, whether it returned cash or stock, i.e. "cash" or "stock";
    8. Column H: If "cash" for column G, the amount of cash received at maturity (excluding interest);
    9. Column I: If "stock" for column G the market value of the stock received at maturity (excluding interest);
       
  2. A description of the process involved in selling and recommending structured products to customers, including: templates of all documents used to assess customers' financial needs and investment suitability;
     
  3. Copies of all presentations, offering documents, marketing materials, advertising and sales literature (as defined in Conduct Rule 2210), which includes information for each structured product sold during the review period that was disseminated outside the firm;
     
  4. Copies of all presentations, marketing materials, and training materials, including broker-dealer use only material, which includes information for each structured product sold during the review period that was disseminated within the firm;
     
  5. A description of all structured products related sales contests, cash and non-cash incentives, other promotions, programs and initiatives in effect during the review period that affected the compensation of the sales force and/or management;
     
  6. A copy of the portion(s) of the firm's written supervisory procedures, compliance manuals or branch manuals that pertain to the marketing and sales of structured product securities;
     
  7. Copies of all customer complaints and arbitration/litigation claims relating to, referring to, or concerning structured products. Provide a copy of the firm's response(s); and,
     
  8. Any other information you believe will help us understand your firm's sales and supervisory process related to these products.

 

This request is made pursuant to FINRA Procedural Rule 8210. This request should not be construed as an indication that FINRA has determined that any violations of the federal securities laws or FINRA rules have occurred, or as a reflection upon the merits of the securities involved or any person who effected transactions in such securities.