In 2026, FINRA opened a review of firms' practices around higher-risk structured products, singling out non-principal-protected 'worst-of' structured notes. These products tie an investor's return to the worst-performing of several underlying assets — a feature that increases risk as more underlyings are added, even though the products are often marketed as 'diversified.'
The review examines how firms supervised concentrations in these products and whether recommendations complied with Regulation Best Interest, covering conduct dating back to 2022. FINRA has separately cautioned that 'principal protection' does not necessarily make a product a conservative, suitable investment for an older investor for whom safety is important.
For investors, the takeaway is simple: regulators increasingly recognize that these products were sold in ways that did not match what many investors understood they were buying. If you suffered losses on a worst-of note, your right to pursue a claim in FINRA arbitration is independent of any regulatory review.