The Investment Products Most Frequently the subject of stockbroker fraud claims.
As one colleague recently pointed out, as a general matter, the investment products that are most prone to fraud, are the same investment products that offer the highest compensation.
Investment Product Compensation Rates
Variable annuities may offer compensation in excess of 6-7% of a customer’s initial investment. Non-traded Real Estate Investment Trusts offer compensation often in excess of 4-5% of a customer’s initial investment. Municipal bonds and corporate debt securities can be sold as principal, and notwithstanding a spread between the bid and what a seller is paid, and the offer, what a buyer is charged, which sometimes can vary up to 50%, current rules allow for the undisclosed mark-up of these transactions, without risk, based upon actual cost, of up to 5% of a customer’s initial investment. Moreover, these same securities can be bought and sold with astounding frequency. The same is true of Unit Investment Trusts, which may be inventoried and sold as principal, once again with undisclosed mark-ups of as much as 5%.
Significant Compensations Earned Often Lead to Fraud
Similarly, structured products, including exchange linked notes, reverse convertible notes, and bond funds are frequently the investment products most associated with misconduct, because once again, in addition to the relatively larger commissions associated with the sale of these products earned by the broker, the brokerage firm generally earns significant compensation, and even significant on-going compensation in connection with the underwriting and affiliated management of these investments.
Guiliano Law Firm – Investment Products Fraud Lawyers
The Guiliano Law Firm, P.C. Practice limited to the representation of investors in claims against stockbrokers and investment professionals for fraud, the sale of unsuitable investments, breach of fiduciary duty, failure to supervise. National Practice. Contingent Fee. Free Consultation. If you think that you may have a claim for unsuitable recommendations, contact us for a free confidential evaluation at (877) SEC-ATTY.
The Investment Products fraud attorneys at the Guiliano Law Firm serve clients nationwide.