OCIE Issues Risk Alert Relating to Structured Note Sales -

Earlier this year, the SEC’s Office of Compliance Inspections and Examinations (the “OCIE”) indicated branch offices and structured products as two of its priorities. As one consequence of this focus, in an August 2015 risk alert, the OCIE identified several deficiencies in the controls that certain branch offices had put into place in connection with sales of structured notes.

In its examination, the OCIE sought to determine whether these firms effectively supervised and monitored activities and risks associated with sales of structured notes to retail investors. The OCIE indicated that its analysis revealed discrepancies in the practices within each firm and discrepancies in the effectiveness of the controls.