Posts belonging to Category Closed End Funds

SEC Reports an Increase in Enforcement Actions


The Securities and Exchange Commission has ramped up enforcement actions against investment advisors, broker-dealers and senior executives over the past two years, the agency said in a statement. SEC Chairman Mary Shapiro attributed the increased activity in part to a reorganization that includes special units staffed by experts in the complex financial products and transactions […]

Insurance Companies Raise Red Flags on Certain Alternative Investments


The recent actions of errors and omissions insurance carriers should serve as a major red flag to investors. Many of these carriers are refusing to issue coverage for sales of certain alternative investments. In other words, these carriers have determined that the risk of loss associated with the sale of certain alternative investments is too […]

Alternative Investments Are No Investment Panacea


Financial advisers need to know that dangers lurk in the complex world of alternative investments and they must disclose these dangers to their clients. At present, many investment advisers are under pressure to sell alternative investments and are doing so in greater numbers than ever before. Alternative investments can include virtually any investment that is […]

Non-Traded Business Development Companies Hit Securities Regulators’ Radar Screen


The Financial Industry Regulatory Authority (FINRA) is taking a closer look at a fast-growing alternative investment known as a non-traded business development company (BDC). According to InvestmentNews, FINRA spokeswoman Nancy Condon states, “we are looking at a number new products being sold to investors and BDC’s are one of them.” BDC’s are typically closed-end funds […]

Most Financial Advisers Don’t Understand Alternative Investments According To John Hancock Survey


Given the array of exotic alternative investments being sold to the public, it’s logical that many investors often don’t understand what they are buying. What is even scarier is that it is likely their professional investment adviser doesn’t understand the alternative investment either. Investment advisers ? 75 percent of them ? admit they do not […]

Morgan Stanley Fined for Gouging Investors


The SEC is scrutinizing mutual funds’ fee arrangements, looking for instances of gouging, and finding plenty of them. Morgan Stanley just agreed to pay $3.3 million for its role facilitating over $1.8 million in payments by a mutual fund to a third party for services the fund did not receive (“Morgan Stanley Settles SEC Case,” […]

High Correlations Among Asset Classes Means There’s No Place To Hide


When world markets move significantly in apparent response to major macroeconomic news, even supposedly “uncorrelated assets” move in unison with them, according to Jason Zweig’s Wall Street Journal article, “Caging Raging Contagion.” Such a significant move occurred last week when the Italian government and bonds collapsed over its fiscal problems, and everything else fell, too.

Investors in Closed-End Funds Get ‘Scammed’


Investors have lost $1 billion investing in initial public offerings of closed-end mutual funds ? on average 22% of their money ? between January and August, 2011. Popular Wall Street Journal columnist Brett Arends suggests that the investors in these closed-end funds have been scammed.

Most Alternative Investments Carry Huge Risks


Investors should use extreme caution before investing in alternative investments. Alternative investments have become the popular “investment du jour” but these investments are fraught with risks. Simply stated, alternative investments are not the panacea that so-called experts represent them to be. For the reasons discussed below, investors need to be very skeptical of any recommendation […]