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Thursday, July 11, 2013

Massachussetts Slaps 15 Firms With Subpoenas on Alts

News summary by MFWire's editors

The state of Massachusetts subpoenaed 15 brokerages over the sale of alternatives to seniors, InvestmentNews' Dan Jamieson reported. The state said it is trying to prevent firms from targeting the elderly to sell complex products that will win large commissions. Among those firms being investigated are BlackRock[profile] Morgan Stanley, UBS[profile], Fidelity[profile] Brokerage Services, Wells Fargo Advisors, Charles Schwab[profile] and Investors Capital Corp. to name a few.

The state's securities division asked for information on sales of alternative investments over the past year, such as structured products, oil and gas partnerships and hedge funds, to state residents 65 and over. The firms have to respond by as early as June 24.

Massachusetts Secretary of the Commonwealth William Gavin gave a statement:
“While these products are not unsuitable in and of themselves, they are accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score … large commissions."
The state that elected Elizabeth Warren has also investigated firms accused of improper sales of non-traded REITs, Jamieson writes. The case was settled with the five firms involved, which have paid a total of $6.1 million in restitution to investors and fines coming to $975,000 in total. 

Edited by: Casey Quinlan

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