Finra probing B-Ds' role in subprime underwriting: Source

The Financial Industry Regulatory Authority Inc. is actively investigating broker-dealer underwriters of subprime securities, a Finra official said this morning at the regulator's national conference in Baltimore.
JUN 24, 2010
The Financial Industry Regulatory Authority Inc. is actively investigating broker-dealer underwriters of subprime securities, a Finra official said this morning at the regulator's national conference in Baltimore. Meanwhile Finra is also preparing to bring more enforcement actions for selling Regulation D deals, commonly known as private placements. As for subprime securities: Finra is looking at whether broker-dealers reported incorrect data when creating the securities, said the official, who asked not to be identified. Such incorrect data could include possible misstatements by firms about the default rates for the underlying mortgages used to create the mortgage-backed securities. The Securities and Exchange Commission in April charged The Goldman Sachs Group Inc. with fraud for its marketing of a subprime mortgage product for institutional investors. Finra is also focusing on private deals for retail investors, attorneys at the Finra meeting said. “I think the regulators are looking at non-traditional products, those that are being marketed to a less sophisticated retail audience,” said Neal Sullivan, a partner with Bingham McCutchen LLP. “A classic example of that would be some of the Reg D offerings.” Mr. Sullivan made his comments after speaking on a panel this morning about enforcement case trends. “I think you hear from the Finra folks that they're starting to see an uptick in enforcement cases in this area,” he said. Mr. Sullivan believes there will be an increase in publicly announced private placement cases filed against broker dealers. “And unfortunately," he said, "some will reflect fraudulent practices.”

Latest News

AssetMark's Talk Tracks AI gives advisors a script for client calls
AssetMark's Talk Tracks AI gives advisors a script for client calls

The new AI feature generates instant client portfolio talking points, slashing meeting prep time for advisors.

Behind the Great Wealth Transfer: Citizens bets on business owners
Behind the Great Wealth Transfer: Citizens bets on business owners

As Citizens expands its advisory footprint, the bank is also going after wealth trapped inside business ownership

Forbes and Shook pull the plug on rankings, events, in 2026
Forbes and Shook pull the plug on rankings, events, in 2026

The Forbes rankings are highly sought after by some advisors and firms for marketing purposes.

Advisor moves: Cresset enters Boca Raton with $4 billion UBS team addition
Advisor moves: Cresset enters Boca Raton with $4 billion UBS team addition

Meanwhile, an advisor tuck-in from Edward Jones expands Kestra's Washington, D.C.-area presence, and Janney deepens its Connecticut footprint with an experienced Wells Fargo advisor.

Kovack Financial Network launches private succession platform for advisors
Kovack Financial Network launches private succession platform for advisors

KFN Succession Center pairs advisors weighing retirement with buyers, as next-gen affordability keeps eroding industry-wide.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income