August 30, 2010
It is clear that most investors are very uneducated in this field. If they have a 401K plan at work they are involuntarily tossed into a program with little direction or guidance. Over the past 31 years as an insurance agent and financial planner I see this on a daily basis. Unhappy investors have flooded the SEC with complaints. There is also a special division to handle complaints from investors who are better educated, have placed "stop-loss orders and been ignored by their broker/dealer. My suggestion is this:
The SEC and the NASD both have definitions for "stop-loss orders." It should be ordered that a full disclosure of "stop-loss order" be defined in writting to all investors including 401K participants. That disclosure should describe the procedures for placing a "stop-loss order" and where to file a complaint when properly placed orders are ignored. The disclosure should be signed by the client and the broker and kept on file by the broker for 5 years. This process should extend to all registered products including mutual funds.
Sincerely, Sidney N. Smith, Coeur d'Alene, Id.