Skip to main content


Representing Individual, High Net Worth & Institutional Investors

Offices in Indiana and New York City


Home > Investor News > Reverse-Convertibles Back In News

Reverse-Convertibles Back In News

Reverse-convertible notes are once again making headlines. This time, it’s the Financial Industry Regulatory Authority (FINRA) with questions. As reported March 25 by Bloomberg, FINRA announced that it is conducting of sweep of various brokers and their advertising and marketing materials involving the products.

FINRA has asked hat brokers provide all requested information on revere convertibles by April 1. A letter of the request is posted on FINRA’s Web site.

Reverse convertibles are big business for brokers. According to the Bloomberg article, banks sold $6.76 billion of the investments last year. In recent months, reverse convertibles have been in the news over complaints by investors regarding the high levels of risks and complexities of the products.

In November 2010, reverse convertible notes were linked to a $500,000 fine levied by the FINRA against former Ferris, Baker Watts LLC, acquired by RBC Wealth Management. FINRA imposed the fine in October, citing inadequate supervision of sales of the notes to retail customers, as well as unsuitable sales of reverse convertibles to 57 accounts held by elderly customers who were at least 85 years old and customers with a modest net worth.

Top of Page