The Street

Never buy a financial product that’s 13 words long, and other lessons from the SEC’s case against UBS

Last week’s $19.5 million settlement between investment bank UBS and securities regulators is just the latest example of why Mom and Pop have no business getting involved with Wall Street’s most convoluted creations.

The Securities and Exchange Commission said on Oct. 13 that UBS had given investors false or misleading information about the structured debt securities known as “Medium Term Securities Linked to the UBS V10 Currency Index with Volatility Cap.”

Products with interminable names often wind up being products that are too complicated for a math Ph.D. to understand, never mind the average investor. (Or their sometimes hapless brokers, who sometimes whine like babies that they’ve been duped by their firms when products blow up.) You can learn a lot of lessons by examining the flaws in the UBS V10. I talk about those lessons in my latest column for TheStreet, which you can read here.

 

Wall Street Will Only Go So Far to Help Older Investors

State securities regulators unveiled a plan at their annual meeting last week that zeroed in on the role stockbrokers can play in sounding the alarm that a senior is at risk of being ripped off.

The securities industry and its regulators have been tripping over themselves trying to make things safer for elderly investors. But the new proposal by The North American Securities Administrators Association (NASAA) may have gone too far for Wall Street’s liking.

Stockbrokers say they would like to be able to tell authorities when they suspect that an elderly client is at risk of financial exploitation. So NASAA and others have been working on laws and regulations that would allow brokers to report their suspicions without violating privacy laws. Various proposals also have allowed brokers to decline to execute a transaction for 10 days if they suspect something fishy is going on.

The NASAA proposal would make it mandatory for brokers to report their suspicions. But it’s likely that the industry won’t go for that idea, preferring instead to have the option of looking the other way when they suspect financial abuse.

You can read my story for TheStreet here.

Vanguard Group Fires Whistleblower Who Told TheStreet About Flaws in Customer Security

The Vanguard Group, the world’s largest mutual fund company, has fired a whistleblower who shared information with TheStreet about deficiencies in the company’s customer account security.

Karen Brock, a client relationship administrator in Vanguard’s Scottsdale, Ariz., office, had told me that customers could access their Vanguard accounts even after entering typographical errors in their personal security answers. In my own account at Vanguard, I have repeatedly tested her assertions and found them to be true.

Brock also had detailed the complaints of a customer who said that he had asked his son to mimic his voice to test Vanguard’s “Voice Verification System.” Vanguard’s system allowed the son to gain access to the father’s account, Brock said. She also shared an internal training document where the names, email addresses, phone numbers and account numbers of several current or prospective clients had evaded the redaction process.

You can read my article about Brock’s firing here. You can see the original article that led to the firing here.

Angry Twitter Users Make Day Even Worse for Online Brokers

As if a turbulent day for stocks wasn’t problem enough for investors, glitches in the websites of many brokerage firms added to the public’s headaches today.

Testy customers took to Twitter to blast their brokerage  firms and mutual fund companies for Web sites that had crashed, leaving them unable to execute trades in a volatile market.

As always, euphemisms abounded. Brokerage firm spokespeople said they had “a slowness issue,” or “a brief period of sporadic Web site inaccessibility,” and the like. But a crash? Not us.

Investors weren’t buying it. “@TDAmeritrade seriously? your servers are crashing today,” wrote one customer. And another: “What a disaster. Time for a new broker.”

You can read my article for TheStreet here.

Antilla Talks to CNBC Squawk Box About Security at Vanguard Group

CNBC’s SquawkBox invited me in yesterday to discuss my story about The Vanguard Group’s online security. A whistleblower has been speaking with me on the record about a complaint she filed against Vanguard with the Securities and Exchange Commission. You can read the article here.

And here’s the CNBC video:

Is Vanguard Making It Too Easy for Cybercriminals to Access Your Account?

A whistleblower has gone to the Securities and Exchange Commission with complaints about the security of customer accounts and information at The Vanguard Group.

The world’s largest mutual fund company told me that its security is strong. But the whistleblower, who spoke to me on the record about her complaints, disagrees. You can read my latest column for TheStreet here.

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