Several years ago, I paid money and attended a seminar to get certified as a "senior advisor" for purposes of addressing the needs of senior citizens. My firm recently told me that I could no longer use the designation of "certified senior advisor." Since I paid for and attended a seminar, can they prohibit me from using this certification?

-G.S., New Orleans

The firm has the right, and indeed, the obligation, to have procedures in place to ensure that designations such as yours are legitimate. Such procedures can take many forms, including the following: requiring representatives to obtain approval before using a designation, reviewing the process for obtaining a designation, maintaining a list of designations that are approved (or prohibited) by the firm, and/or requiring appropriate disclosure about what a designation does and does not signify.

In addition, some states prohibit or restrict the use of senior designations. In Notice to Members 07-43, FINRA reminded firms that NASD Rule 2210 prohibits firms and registered representatives from making false, exaggerated, unwarranted or misleading statements or claims in communications with the public, in particular the use of professional designations suggesting an expertise in retirement planning or financial services for seniors.

The criteria used by organizations that grant professional designations for investment professionals vary greatly. Some designations require detailed coursework, testing and mandatory continuing education. Others can be obtained simply by paying a fee. The purpose of Notice 07-43 was not to endorse or prohibit any particular designation or to suggest that firms discourage reps from getting training in specific subjects. Rather, it was to remind firms of the need to have procedures in place to ensure that those designations are legitimate, and not used in a misleading manner.

As with all supervisory procedures, these procedures should be written, clearly communicated to employees and effectively enforced.

Several customers have called me recently wanting to purchase stock in a certain large company that has filed for bankruptcy. When I've refused to buy the stock for them, they argued that once the company comes out of bankruptcy, the value of the stock will appreciate. I've explained to them that there's no guarantee of this happening but my arguments seem to fall on deaf ears. What are your thoughts?

-W.P, via e-mail

You are absolutely correct. The idea of investing in a company that is in bankruptcy in the hope that the stock will appreciate once the company emerges from bankruptcy is ridiculous and most likely fueled by Internet rumors. In fact, the SEC and FINRA recently issued an Alert reminding investors that "holding shares of any company involved in bankruptcy, or buying shares in a bankrupt company in the hope that those shares will surge in value down the road, are highly risky courses of action."

When companies emerge from bankruptcy, the common stock of the "old" company is usually worthless. In most cases, the bankruptcy reorganization will cancel the existing shares. While a bankruptcy reorganization will typically allow the "new" company to distribute new shares under a new trading symbol, holders of the common stock of the "old" company generally do not get any of those shares. Remember, stock is equity, not debt, and the holders of the stock are, in effect, the owners of the company. A company must pay off existing debt to its creditors before it emerges from bankruptcy and therefore the bondholders (and other creditors) will usually receive shares in the new company as partial payment. This leaves little or nothing of value for the common stockholders of the "old" company.

ALAN J. FOXMAN, ESQ., is an attorney with Fred Chikovsky & Assoc. in Boca Raton, Fla. His comments are not intended to be legal advice. He can be reached at alanfoxman@bellsouth.net.