The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints against brokerage firms and advisors for selling them structured CDs – a class of structured products. Brokerage firms and banks are selling record numbers of the so called “CDs” that are extraordinarily complex products that are nothing like CDs and contain substantial risks.
These CDs are usually market-linked or structured so that their performance depends on a basket of stocks or other assets instead of a flat interest rate like traditional CDs. When they mature CD holders get their original money back plus a return based on the performance of certain assets or benchmarks.
Banks love these CDs because they are an inexpensive sources of funding that generate huge fees all the way down the chain. The issuer gets fees and the financial adviser gets paid more for selling a market-linked CD than a conventional CD or a mutual fund. Typically, an adviser who sells the CD can get commissions of up to 3% of the CD’s value.