FINRA has issued a new Investor Alert intended to explain what closed-end funds are, how they differ from traditional mutual funds, what a distribution rate is and what to ask before investing. FINRA's new investor alert (linked below) explains that closed-end funds are similar to mutual funds, but unlike mutual funds (which continuously sell newly issued shares and redeem outstanding shares), most closed-end funds offer a fixed number of shares in an initial public offering which are then traded on an exchange. This investor alert urges investors to ask the following six questions before
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The SEC and FINRA each charged a Puerto Rico-based broker-dealer and one of its branch office managers with supervisory and suitability violations. The charges concern a former broker who persuaded customers to invest in company-affiliated mutual funds using money borrowed from a company-affiliated bank. In settled administrative proceedings, the SEC and FINRA collectively charged (i) the company with violating SEA Section 15(b)(4)(E) ("Registration and Regulation of Brokers and Dealers"), NASD Rule 3100 and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"); and (ii)
The SEC settled charges with three fee based advisories for allegedly steering mutual fund clients toward more expensive share classes in order to collect larger fees.
FINRA fined a broker-dealer $2.9 million for unsuitable sales of nontraditional exchange-traded funds and related supervisory failures.
The SEC provided guidance to investors on how to read key information in a mutual fund prospectus.