CIT InterNotes, debt instruments issued by CIT Group, were marketed by many brokerage firms as safe and conservative investments to their individual clients. Some investors were even told by their brokers that these were “no risk” investments. However, it appears that these debt instruments were increasingly sold to retail clients due to the reluctance of institutional investors to loan CIT Group money due to their worsening financial condition. Instead, these notes were marketed by some of the largest financial institutions including, Banc of America Securities, Wachovia Securities n/k/a Wells Fargo Advisors, UBS, Morgan Stanley Smith Barney, Merrill Lynch and Citigroup to their individual investor clients. Many of these brokers marketed the CIT InterNotes to their elderly clients or those already in retirement as safe, suitable and stable investments. One major selling feature of these particular notes was a “death put” feature, which allowed the beneficiaries of the bondholder to sell the bond back to the issuer at face value or “par” when the bondholder died. However, due to CIT Group’s worsening financial condition, this feature could now be worthless. FINRA is currently investigating whether brokerage firms properly and sufficiently disclosed the risk associated with these notes to their prospective purchasers. Under FINRA’s rules, brokers have a duty to their clients to disclose prospective risks and to conduct due diligence to ensure that representations made by the company regarding their financial condition are indeed true.
If you were sold CIT InterNotes by a broker, you may be entitled to recover some of your losses. Please contact SanDiego@Thieler-Boeh-Seitz.com
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