The Financial Industry Regulatory Authority issued an alert to investors to look carefully into the potential risks of nonrecourse stock-based loan programs before participating in them.

The warning, issued Thursday, came after recent enforcement actions by FINRA involving stock-based loan programs. Investors should watch for risks tied to stock-based loans, particularly as some of them involve unregistered and unregulated third-party lenders, FINRA said, and can have tax consequences for investors.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.