Non-Purpose Loans and Securities Backed Loans (SBL’s) – An Accident Waiting to Happen

STOCKBROKER LAW - Posted on July 26, 2017

Many brokerage firms have been promoting non-purpose loans, resulting in abusive
sales practices and supervisory violations associated with the aggressive marketing of these lending
arrangements. Brokerage firms suggesting that investors borrow against their securities to
originate non-purpose loans has been at a number of large brokerage firms including Morgan Stanley, UBS, Wells Fargo and Bank of America/Merrill Lynch have been suggesting that investors borrow
against their securities to originate non-purpose loans.

Most investors are unaware of the hidden financial incentive brokers have in suggesting these risky
non-purpose loan arrangements. These loans oftentimes come with variable interest rates and are tied
into structured products packaged with cost laden contractual obligations on the part of the customer.

In short, non-purpose can be a recipe for disaster and many unwitting investors have been duped into these
transactions which only serve to enhance the fees which firms are already making on their customer account
relationships with existing asset management fees, transactional fees and various other brokerage fees.

We offer a free initial consultation to investors who have been victimized with predatory non-purpose
loan and Security Based Lending (SBL’s) loan transactions. For a free initial consultation contact the
Law Offices of Timothy J. O’Connor at (518) 426-7700.