The Securities and Exchange Commission is pressing large banks to provide investors with more accurate information about structured notes, complex securities that are often sold to wealthy individuals. The SEC's Office of Capital Market Trends, created in 2010 to monitor disclosures by financial institutions, is requesting that Citigroup, Bank of America, JPMorgan Chase, and other issuers improve their disclosure about the risks and pricing of the securities, according to the banks' correspondence with the regulator.
Sales of structured notes have surged in the current low-yield environment. The products generate fees for banks and can sometimes offer a cheap source of funding. Citigroup reported in the correspondence that more than 8% of its outstanding long-term debt, around $26 billion, was in the form of structured notes as of March 31, 2012.
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