{"id":966,"date":"2013-06-28T11:25:58","date_gmt":"2013-06-28T18:25:58","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=966"},"modified":"2014-01-21T18:33:32","modified_gmt":"2014-01-22T02:33:32","slug":"investor-bill-of-rights-2-and-3","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/wall-street\/investor-bill-of-rights-2-and-3\/","title":{"rendered":"Investor Bill of Rights 2 and 3"},"content":{"rendered":"<p><a href=\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2013\/06\/risk.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-971\" title=\"Investor Bill of Rights 2 and 3\" alt=\"\" src=\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2013\/06\/risk.png\" width=\"225\" height=\"225\" srcset=\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2013\/06\/risk.png 225w, https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2013\/06\/risk-150x150.png 150w\" sizes=\"(max-width: 225px) 100vw, 225px\" \/><\/a>Our last post described the \u201cInvestor Bill of Rights\u201d created by the North American Securities Administrators Association (NASAA).\u00a0 We recently posted the first \u201cRight\u201d. \u00a0 Set out below you will find Rights 2 and 3 along with my comments:<\/p>\n<p><strong><span style=\"text-decoration: underline;\">INVESTOR RIGHT #2<\/span>) Receive<em> <\/em>complete information <\/strong><strong>about the risks, obligations, and costs of any investment before investing.<\/strong><\/p>\n<p>Comment: <em>The key word here is \u201ccomplete.\u201d It is not enough for a broker to say (usually after the fact) that everyone knows there is a \u201crisk.\u201d The broker dealer claims to offer, and within realistic expectations, should offer their securities expertise. Complete information should include standard deviation and\/or beta of a recommended stock or mutual fund. For bonds, minimal disclosures would include the rating of the specific bond.\u00a0 For complex structured financial products, the ratings alone are wholly insufficient to fully capture the risks embedded in those products.\u00a0 The problem is exacerbated by the fact that the public customer was allowed even to invest in this volatile product market. <\/em><\/p>\n<p><strong><span style=\"text-decoration: underline;\">INVESTOR RIGHT #3<\/span>) Receive recommendations consistent with your financial needs and investment objectives.<!--more--><\/strong><\/p>\n<p>Comment: <em>This used to be covered by NASD Rule 2310 which covered the \u201csuitability\u201d of a specific security for a particular investor.\u00a0 The security itself had to first be suitable for SOME investors (Reasonable Basis Suitability) and only then should it be tied to a customer\u2019s individual financial situation (Customer Specific Suitability).\u00a0 The new FINRA Rule 2111 has been adopted and affords protection for investors regarding recommended strategies including recommendations to \u201chold.\u201d\u00a0 While this may lead to increased enforcement actions by FINRA, it remains to be seen how arbitration panels will deal with the new language. <\/em><\/p>\n<p><em>To learn more about Dale Ledbetter, visit his website at <a href=\"http:\/\/www.dlsecuritieslaw.com\" target=\"_blank\">www.dlsecuritieslaw.com<\/a>. <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Our last post described the \u201cInvestor Bill of Rights\u201d created by the North American Securities Administrators Association (NASAA).\u00a0 We recently posted the first \u201cRight\u201d. \u00a0 Set out below you will find Rights 2 and 3 along with my comments: INVESTOR RIGHT #2) Receive complete information about the risks, obligations, and costs of any investment before investing. Comment: The key word here is \u201ccomplete.\u201d It is not enough for a broker<\/p>\n","protected":false},"author":14,"featured_media":971,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-966","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wall-street"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Investor Bill of Rights 2 and 3<\/title>\n<meta name=\"description\" content=\"Dale Ledbetter comments on Rights 2 and 3 of the Investor Bill of Rights.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.paladinregistry.com\/blog\/wall-street\/investor-bill-of-rights-2-and-3\/\" \/>\n<meta property=\"og:locale\" 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