Investor Alerts

As an investor, you may have read about "Class A," "Class B," Class C", or other classes of mutual fund shares. If you are thinking about choosing one of these classes, it is important for you to understand the differences between them. FINRA regulates broker/dealers and their registered representatives, and we provide investors with information about securities products and services.

Rising costs of food and fuel, declines and volatility in the housing and financial markets, and an ever-tightening credit crunch have gathered to form a perfect storm that could lead some Americans to make poor financial choices.

Many Americans tap their retirement savings before they retire, potentially harming their efforts to provide for a financially secure future.

In another variation of the identity theft tale, stock traders posing as employees of a made-up Latvian brokerage firm appear to have stolen personal information from individuals who thought they were applying for a job through the popular classifieds website, Craigslist (www.craigslist.org).

If the traffic on fax machines and in email boxes across the nation is any indication, life is pretty easy. You can get a college degree without setting foot in a classroom, travel to popular vacation destinations for next to nothing, or make a quick and handsome profit investing in oil, gas, or alternative energy stocks.

We are issuing this Alert out of a concern that employees who have the opportunity to invest in company stock may be concentrating too much of their retirement savings in a single security. Of particular concern are employees who have all or most of their 401(k) assets in their employer's stock. If the stock takes a beating, so does your retirement savings.

Email is likely a new twist on the old "Pump and Dump" scheme. Pump and dump scams involve the recommendation of a company's stock through false and misleading statements (the pump). Misled investors then buy the stock, creating demand for the stock and often causing its price to soar. Fraudsters then sell off their shares (the dump), usually leaving investors with worthless, or near worthless, stock.

Early retirement is an alluring prospect. When faced with a pitch that promises that you can cash in your company retirement savings in your 50s, reinvest the money, and live comfortably off the proceeds for the rest of your life, many simply can't say no.

Be wary of any stock pitch that ends with the salesperson sending you to a "government" regulator's website. There's a good chance it's a scam.

If you are thinking about cashing out your 401(k) when you change jobs, think twice. Or maybe three times. You might be about to forsake a financially secure retirement. We are using this Alert to educate investors to the potentially devastating impact cashing even a modest amount of 401(k) assets can have on retirement savings.

If you have a life insurance or annuity contract, you may have been approached to exchange it for a new model, one with better or the latest features. You need to know that even though tax law makes the exchange income tax free and the new contract may sound better for you, you may be losing - not gaining - if you make the exchange.

The threat of bird flu is fueling stock scams touting large gains from companies that claim to be poised to capitalize on helping the world avoid a global pandemic. We are issuing this Alert to warn investors that fax and email investment scams may come your way trumpeting the promise of large gains for companies with products and services aimed at fighting bird flu.

You get text messaged on your cell phone. You check it—and it's not from anyone you know. Instead, it's an unsolicited promotion for a low-priced "hot stock." The short message includes a stock symbol and reads: HOT BUY. 200% Profit Mon. 100% IN 2WKS. You've been cell phone spammed!

The Internet and, more recently, wireless technology have made it easy for investors to check brokerage account information and initiate investment transactions on the go. We are issuing this Alert to warn investors to take precautions to help ensure the security of their brokerage accounts. Not doing so puts your account information and investments at risk.

To raise capital, brokerage firms sometimes sell their own or an affiliate's securities. Such broker-dealer self-offerings (BDOs) can take the form of registered public offerings or private placements.

Don't have the cash for the down payment on your dream house? At some brokerage firms that offer up to 100% loan-to-value ratio mortgages or pledged-asset mortgages, that's not a problem.

With a rising stock market, record low interest rates, and large gains in home value, some investors have taken out new mortgages, refinanced, or obtained line-of-credits secured by their homes for the specific purpose of investing in securities. The hope is that the investment will not only pay the mortgage, but also generate additional income. Unfortunately, it doesn't always work out that way.

Certain load mutual funds allow you to buy Class A shares without paying the front-end sales load if you buy that fund using proceeds from the sale of shares in a different mutual fund family for which you paid a front-end or back-end sales charge.

You may be eligible for a refund of a portion of the front-end sales charge that you paid when you purchased Class A shares of a mutual fund from your securities firm. An industry-wide survey indicated that investors did not receive discounts in approximately one out of every five transactions that were eligible for discounts.

Before you invest in a principal-protected fund, it is important to understand how "principal protected" funds (or, alternatively, "principal protection," "capital preservation," or "guaranteed" funds) work and what they cost.

Mutual funds often offer discounts on front-end sales charges or loads for larger investments. The investment levels at which the discounts become available are called "breakpoints."

If you own a life insurance policy, you may have been approached to exchange it for another new policy. You need to know that even though the tax laws make the exchange income tax free and the new policy may appear better to you, you may be losing - not gaining - if you make the exchange.

Have you received faxes, spam, or junk email urgently recommending that you invest in stocks of companies that make defense, anti-terrorism, or biological detection products? If you have, you may be the target of an investment scam.

FINRA is issuing this alert to provide basic information about RMDs, and to provide answers to a number of common RMD questions. We focus on RMDs from traditional IRAs because these are the type of retirement accounts where individuals are directly responsible for computing required minimum distributions.