BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Regulatory Sanctions
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Investments - Strategies
UIT Investing – Like ‘Watching Grass Grow’
[Photo: Watching Grass Grow / Huffpost.com]
by Howard Haykin
A UIT is a SEC-registered investment company that … offers investors shares or "units" in a fixed portfolio of securities via a one-time public offering. A UIT terminates on a specified maturity date, often after 15 or 24 months, at which point the underlying securities are sold and the resulting proceeds are paid to the investors. A UIT's portfolio is not actively managed between the trust's inception and its maturity date. A customer who purchased, say, a 24-month UIT and held it until maturity might pay a sales charge of about 3.95%. However, a customer who sold that UIT before maturity and used the sale proceeds to purchase a new UIT, would incur about 3% in additional sales charges.
WHAT WENT WRONG. Over a 4-1/2 year period, the Oppenheimer broker recommended that his customers roll over UITs more than 100 days prior to maturity on approximately 1,000 occasions. Indeed, although his customers' UITs typically had a 24-month maturity period, the broker recommended that they sell their UITs after holding them for, on average, only 393 days (around 13 months), and use the proceeds to purchase a new UIT. FINRA deemed these recommendations unsuitable, in part because Oppenheimer's customers incurred unnecessary sales charges - which the firm reimbursed to the customers. The broker, meanwhile, lost his job and was hit with a 3-month suspension and a $5,000 fine.
INVESTOR TAKE AWAY. This case further illustrates why investors should adopt a “buy and hold” investment strategy and, where practicable, hold securities until maturity date.
[For further details, click on … FINRA Case #2018060228201.]