Even when the stock market is going up, it is important for investors to remember that the price they pay and the investment type they choose can have a big impact on their financial success. While financial professionals and firms are bound by rules regulating what they can sell to the public and the disclosures they need to provide to potential investors, a review of the records of the Financial Industry Regulatory Authority ("FINRA") reveals that those rules are not always followed. Even with oversight from FINRA and other agencies, sales of unsuitable products can continue undetected for years. 

In the attached press release, FINRA announced that it found sales practice violations over a seven year period at one firm in 3 separate products - variable annuities, mutual funds and 529 Plans. This is not the first time that FINRA has found such systemic violations at a firm in these types of products, particularly variable annuities and mutual funds. While these products are suitable for some individuals they appear to have certain characteristics that make them either difficult to monitor or easily sold to unsuitable investors. Unfortunately, even when FINRA identifies a problem area and addresses it, a penalty is usually not assessed for years after the initial violations and individual investors do not often share in the proceeds. If an investor has been sold unsuitable products, often their best option is to try to recover their losses by filing an arbitration proceeding with FINRA.