FINRA opened a review into high risk structured product supervision and firm compliance with Regulation Best Interest (Reg BI), concentration, and suitability concerns, through a sweep letter sent to registered brokerage firms. A sweep letter is FINRA's way of investigating an industry-wide issue or trend—in this case, the issue of high-risk structured product sales that may run afoul of industry rules.
In a May 2026 sweep letter entitled "Concentrations in Non-Principal Protected 'Worst-of' Structured Notes," FINRA requested firms provide copies of written supervisory procedures (WSPs) related to structured notes and complex products that were in place from 2022 through 2025. The regulator also asked firms to describe supervision procedures for structured notes, including restrictions such as concentration limits and how brokers are compensated for structured note sales.
For example, in 2023, Stifel Nicolaus & Company broker Chuck A Roberts stood accused of fraud, negligence, breach of fiduciary duty, overconcentration, and unauthorized trading related to unsuitable structured product sales. A number of customer disputes alleging misconduct and requesting millions of dollars in damages remain pending in Roberts' BrokerCheck file. Roberts' allegedly excessive and unauthorized trading racked up sales charges, fees, and commissions that purportedly harmed his customers.
FINRA barred Chuck Roberts from the securities industry in 2025 after reviewing allegations that Roberts' structured product recommendations were not in his customers' best interests.
The current worst-of concentration sweep letter seeks to identify how firms ensure compliance with Reg BI, asking firms to describe how they address conflicts of interest and how representatives are compensated for structured note sales, such as the aforementioned commissions Roberts reportedly received while excessively trading in customers accounts.
FINRA seeks to understand how these potential conflicts of interests manifest and how firms seek to address them while protecting their customers.
If you invested with a broker, investment adviser, or brokerage firm whose structured note or similar complex product recommendations were unsuitable or resulted in damages, such as losses or excessive commissions and other fees, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.