meta_id 3169141

On May 19, 2026, the Financial Industry Regulatory Authority (FINRA) announced it will review member firm practices regarding higher-risk structured products, specifically non-principal protected "worst-of" structured notes. The review will examine how firms supervise concentrations in these products and ensure compliance with Regulation Best Interest and FINRA rules when registered representatives recommend them to investors. Structured products combine traditional securities, such as bonds, with derivative components to meet specific investment objectives including growth, income, or risk management. Unlike mutual funds or exchange-traded funds (ETFs), structured notes do not hold an actual underlying portfolio; instead, the note issuer promises to pay a return based on a formula incorporating the performance of one or more reference assets. While structured products may offer higher return potential than their reference assets, they present unique risks. "Worst-of" notes—which provide payoffs depending on the worst performing reference asset in a pre-specified group—present particularly complex features warranting heightened supervisory scrutiny. FINRA has identified multiple instances where firm representatives concentrated customer assets in structured products lacking principal protection and featuring "worst-of" characteristics. Highly concentrated investments in complex products pose elevated risk, with some investors losing significant portfolio portions through such concentrated positions. Structured notes can expose investors to losses uncorrelated with overall market conditions. While FINRA's review will affect only a subset of member firms, the organisation encourages all firms recommending these products to review their training, guidance, controls, and supervisory structures. Firms should evaluate their practices against the questions outlined in FINRA's guidance letter. Additional compliance guidance and examples of effective practices are available on FINRA's website and in its Annual Regulatory Oversight Report.