December 11, 2007
Galvin Comes Down On "Structured Products"
By Matthew L. Brown
Secretary of the Commonwealth William F. Galvin today charged Boston-based Cantella & Co. Inc. with failure to supervise its representatives in the sale of structured products and with making false and misleading responses about its structured products business.
A "structured product" is defined by Galvin as "securities derived from or based on a single security, a basket of securities, an index, a commodity, a debt issuance and/or a foreign currency."
“These ‘structured’ instruments are highly complex and it is essential not only that investors be informed of the risks as well as the benefits of investing in them but that representatives thoroughly understand the instruments they are selling to Massachusetts investors,” Galvin said.
The securities division of Galvin's office made inquiries in July of a number of firms offering structured products to their clients.
As a result, Cantella & Co. faces an administrative complaint that “focuses primarily on Cantella’s materially false and misleading responses to inquiries made by the division as to its retail products business, and on Cantella’s overall failure to create, implement and enforce adequate policies and procedures that would enable reasonable supervision of its registered representatives,” according to the division.
A "structured product" is defined by Galvin as "securities derived from or based on a single security, a basket of securities, an index, a commodity, a debt issuance and/or a foreign currency."
“These ‘structured’ instruments are highly complex and it is essential not only that investors be informed of the risks as well as the benefits of investing in them but that representatives thoroughly understand the instruments they are selling to Massachusetts investors,” Galvin said.
The securities division of Galvin's office made inquiries in July of a number of firms offering structured products to their clients.
As a result, Cantella & Co. faces an administrative complaint that “focuses primarily on Cantella’s materially false and misleading responses to inquiries made by the division as to its retail products business, and on Cantella’s overall failure to create, implement and enforce adequate policies and procedures that would enable reasonable supervision of its registered representatives,” according to the division.
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