Another Wall Street Product Failure
filed in Daily Buzz News on Mar.31, 2011
Jake Zamansky submits:
When will Wall Street end its addiction to high priced, high risk, complex investments that brokers pitch as the greatest invention since sliced bread but end up turning investors’ portfolios to toast?
Most likely, never. The products keep coming, in fact, retail sales of structured products hit a record $52 billion last year, up from $34 billion in 2009, and the Wall Street experts and wunderkinds that create these products never seem to understand their inherent risks.
Take, for example, the latest disastrous product to blow up: complex bonds known as “reverse convertible notes.” According to a story in Thursday’s Wall Street Journal, the Securities and Exchange Commission is investigating whether Wall Street investment houses that developed the bonds did an adequate job of disclosing risks and fees to investors before they bought the notes. The notes have been a hot product. (A clear warning sign to investors – stay