Too Much Hype in Online Brokerage Ads?

Television commercials for online brokerages that present overly optimistic visions of potential stock market riches are drawing attention from regulators concerned that the pitches may downplay the risks of active trading.

“Clearly there is hyperbole and exaggeration in these ads and that’s what makes them funny or eye-catching. But there is also a not-so subliminal message that you’re behind the times and you’re going to miss out if you invest for the long term or if you invest in mutual funds,” Marc Beauchamp, a spokesman for the North American Securities Administrations Association, a group of state regulators, told Bloomberg News.

NASAA members say they plan to monitor ads by online brokerages, with an eye toward seeing whether a lack of emphasis on risk amounts to misrepresentation.

The National Association of Securities Dealers issued a “compliance alert” to its members last month reminding them that “advertising and promotional materials must not set unrealistic expectations about. . .the opportunity to profit through electronic trading.”

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