Mass. Secretary of State William Galvin launched an investigation into the sale of dozens of mutual funds this week, saying the products – often referred to as “hedge funds for the masses” – pose risks that the average investor may not grasp, Boston Business Journal reported.
Among the funds that are part of the investigation are those created by JPMorgan, Wells Fargo, BlackRock and Eaton Vance. Galvin’s office has subpoenaed advisers that deal with those funds, demanding documents related to the recommendations they provide retail investors about the funds.
The firms under investigation have not been accused of wrongdoing at this point, according to Galvin.
Alternative mutual funds engage in activities that their traditional counterparts avoid, such as short-selling and futures trading. Compared to traditional mutual funds, they are seen as high-risk, high-reward.
“While alternative mutual fund are not unsuitable in and of themselves for retail investors, they can be accidents waiting to happen when they are sold to investors who do not understand the risks and downside associated with the product,” Galvin said in a statement.
The funds include probe are:
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