Prepackaged portfolios from Folio Investing may contain individual stocks, mutual funds or exchange-traded funds.
Covestor, which began managing money in November 2009, tracks the portfolios of about 30,000 users who choose to make their investment actions viewable to others on the site, and users may have their accounts track the trades of about 150 pre-screened managers on the site.  "It's like an open-source hedge fund," said Perry Blacher, chief executive officer of London-based Covestor.

Some of the managers on the Covestor site are professional investment advisors registered with the SEC and some aren't. The managers range from Atlas Capital Advisors, a San Francisco-based registered investment advisor that manages $175 million for high-net-worth investors, to "an ophthalmologist in Wisconsin," Blacher said.  Wealthfront, which started in October 2009, lets users invest as little as $10,000 among 40 different registered investment advisors who normally have account minimums of $1 million. The firm has about $180 million in assets invested through its site.  Wealthfront managers returned an average of 30% from the site's start in October 2009 through February 18, compared with a 27% gain in the Standard & Poor's 500 index. The managers charge average fees of 1.3%.

These sites don't represent a competitive threat to traditional brokerages, said Jim Wiggins, a Morgan Stanley Smith Barney spokesman.

"People don't come to Morgan Stanley Smith Barney for discount trading," he said. "They come for professional money management and to access some of the products and services that are only available through a global investment bank."

UBS Fined $2.5 Million Over Structured Notes
(Bloomberg News)  UBS AG, Switzerland's largest bank, was ordered to pay investors $8.25 million and fined $2.5 million over sales of Lehman Brothers Holdings Inc. structured products, according to the Financial Industry Regulatory Authority.
UBS "effectively misled" some investors when selling the products, the industry-funded regulator's Web site says. The Zurich-based bank was ordered to repay some investors who bought Lehman structured notes after March 2008. The securities, which were called "100% Principal-Protection Notes," became almost worthless when Lehman filed for bankruptcy that September.

"In cases, UBS' financial advisors did not even understand the complex products they were selling, and as a result, they neglected to disclose necessary information to customers about the issuer's credit risk so investors would understand the magnitude of the potential losses," comments Brad Bennett, Finra's chief of enforcement, in a statement.

UBS' brokers sold $1 billion of the Lehman structured products to U.S. clients, spokesman Kris Kagel said in November. The investments, which are debt bundled with derivatives, were called principal-protected notes because they allowed investors to earn money when stocks rose without taking losses when they fell, as long as the issuer stayed solvent.

"The significant majority of UBS' Lehman structured product sales were conducted properly," says Allison Chin-Leong, a UBS spokeswoman. Any losses directly resulted from Lehman's "unprecedented and unexpected" failure, which hurt all bondholders, she says.

UBS has already paid about $14.5 million in settlements or arbitration awards to investors who bought Lehman notes from March to June 2008, according to a document posted on Finra's Web site. Last year, the Securities and Exchange Commission contacted several financial firms to discuss their use of the term principal-protected and whether it is misleading, according to people familiar with the matter who requested anonymity because the inquiry was informal.

Derivatives are contracts whose value is derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in interest rates.

First « 1 2 3 4 5 6 » Next