QOTD: Regulators Watching Aggressive Yield Chasing

It’s early, but we’ve already got our quote of the day…

If you’ve been reading the site, you know I’ve become increasingly dismayed at the ongoing ridiculousness of “The Search for Yield”.  Even TRB contributor The Stock Rabbi has weighed in, see: “We Found Bin Laden So Now We’re In Search of Yield”

Anyway, Finra has just published a 16-page bulletin on its site outlining their priorities and things they are looking carefully at for 2012.  Among the items was a mention of REITs, VAs and private placements…

Here’s Finra’s own words (via Investment News):

“Finra is informing its examination priorities against the economic environment that investors have faced since 2008, as these circumstances have steadily contributed to conditions that foster an increased risk of aggressive yield chasing, inappropriate sales practices, unsuitable product offerings, and misappropriation and fraud…

“Given the low yields on Treasuries, we are concerned that investors may be inadvertently taking risks that they do not understand or that are inadequately disclosed as they chase yields.”

These private REITs are the devil and I guarantee that the tornado of sales activity in VAs over the last few years will be dumping skeletons out on the grass as it slowly winds down and becomes a bit easier to see directly into.  No such thing as equity-linked guaranteed products without a catch or two, trust me.

Source:

Targeting ‘yield chasing,’ Finra issues watch list (Investment News)