Articles Tagged with ETF

AdobeStock_199789587-300x200According to public records with the Financial Industry Regulatory Authority (FINRA), Global Arena Capital Corp broker Erik Pica has customer complaints against him. In May 2018, a customer alleged that Pica recommended an unsuitable leveraged exchange-traded fund (ETF), was negligent in his supervisory duties, and over-concentrated the account. In April 2018, a customer alleged that Pica executed unauthorized trades of shares in Rite Aid Corporation and Valeant Pharmaceutical. In March 2018, a customer alleged that Pica recommended unsuitable and “highly speculative” investments, churned the account and was negligent in his supervisory duties. He was also accused of misrepresenting material facts. These are all against securities laws and internal firm rules.
Churning, also referred to as “excessive trading,” is a particularly egregious form of broker misconduct, and is when a broker trades in and out of securities, sometimes on a daily basis in order to generate commissions for himself. This typically results in the customer paying unnecessary fees. ETFs tend to be highly risky and illiquid investments that are not suitable for all investors based on their age, net worth, investment sophistication and investment risk tolerance and objectives. If the ETFs Erik Pica recommended for his clients were not suitable based on these factors, and others, his former brokerage firm, Global Arena, may be liable for customer losses on a contingency fee basis in the FINRA arbitration forum.
Erik Pica was previously registered with First Midwest Securities in New York, New York from August 2009 until February 2012 and Global Arena Capital in New York from January 2012 until April 2015. He is currently registered with Joseph Stone Capital in New York, and has been since April 2015. He has seven customer disputes against him, four of which are currently pending, according to FINRA records available to the public.

Did you or someone you know lose money with Christopher Paul Anthony, a former registered representative with Rhodes Securities? If so, the Chicago-based attorneys of Stoltmann Law Offices may be able to help you recover those losses on a contingency fee basis. We bring claims against firms such as Rhodes Securities in the Financial Industry Regulatory Authority (FINRA) arbitration forum. Please call 312-332-4200 today for your free consultation about how you may be able to recover your losses. The call is free with no obligation.

Mr. Anthony has been accused of churning, failing to supervise, negligence, breach of fiduciary duty, breach of contract, trading with discretion, trading outside the investment objectives of his client’s accounts and recommending unsuitable investments in products such as Foreign stocks and Indexed Exchange-Traded Funds (ETFs). A broker must only recommend securities that are suitable for his clients by taking into account their net worth, age and investment portfolio objectives. ETFs tend to be risky and illiquid investments that are not suitable for all investors. Churning, also referred to as excessive trading, is a particularly egregious transgression of securities laws, because it is a tactic used primarily for the broker to make large commissions at the expense of the client.

Mr. Anthony was registered with Principal Financial Securities in Dallas, Texas from August 1983 until January 1995, Absolute Investments Inc. in Dallas from December 1994 until June 1995 and Rhodes Securities in Fort Worth, Texas from June 1995 until April 2015. He has two pending customer disputes against him and is currently not registered within the industry, according to his FINRA BrokerCheck online report.

According to a recent InvestmentNews article, Morgan Stanley has agreed to pay $8 million in penalties and admit wrongdoing in order to settle charges related to exchange-traded funds (ETFs) investments. The bank recommended ETFs to advisory clients, according to the Securities and Exchange Commission (SEC). The SEC claimed that the bank did not adequately implement its policies and procedures to ensure that clients understood the risks involved with the inverse ETFs. They are typically unsuitable for investors who plan to hold them longer than one trading session. Morgan Stanley allegedly solicited clients to purchase inverse ETFs in retirement accounts where the securities were held for longer than one trading sessions which led to losses. If you were a victim of inverse ETF sales by Morgan Stanley, please call 312-332-4200 today to speak to one of our attorneys about your options of suing Morgan Stanley in the arbitration process. We take claims on a contingency fee basis. The call is free with no obligation.

Leveraged and inverse exchange traded funds (ETFs) are almost always unsuitable and inappropriate for investors when recommended by a financial adviser.  Hundreds of clients have filed class action lawsuits or FINRA arbitration claims to recover the losses sustained with these investments.

A leveraged exchange-traded fund (ETF) is a fund that uses financial derivatives and debt to amplify the returns of an underlying index. Leveraged ETFs are available for most indexes, such as the Nasdaq 100 and the Dow Jones Industrial Average. These funds aim to keep a constant amount of leverage during the investment time frame, such as a 2:1 or 3:1 ratio.  These tend to be extremely high risk investments that simply shouldnt be pitched to investors.  Most brokerage firms have hightened suitablity standards for clients who are pitched these investments.  Unfortunately, financial adviusors still tend to recommend these investments despite these heightned procedures.

The main regulator of brokerage firms, FINRA, has published extensive Notice To Members warning brokerage firms about sales of inversed and leveraged ETFs.  For example, in a release entitlted Non-traditional ETFs FAQ, FINRA disclosed the following in response to the question Can leveraged and inverse ETFs be suitable for a retail investor? “While it is not FINRA’s position that all leveraged and inverse ETFs are unsuitable for all retail customers, firms that recommend them must carefully consider their suitability for each customer. Of particular concern, in light of their reset feature, is whether one is recommended as an intermediate or long-term investment rather than as part of a closely monitored trading or hedging strategy.”

The U.S. Securities and Exchange Commission (SEC) is looking into penalizing BlackRock Inc.’s iShares Gold Trust after the Trust allegedly sold $296 million in shares of an exchange-traded fund between February 19th and March 3rd of this year. Because of the problem, the company may be required to repurchase the excess shares at the original price plus interest. The iShares Gold Trust registered with the Securities and Exchange Commission (SEC) for 300 million shares, after it said it sold between late February and early March nearly 25 million more shares than it had previously registered for. Blackrock stated that it may have to sell gold in the fund in order to meet its obligations by buying back the shares that were inadvertently not registered and paying interest to investors who purchased the shares. Those investors may have the right to collect damages from the fund. It may be required to re-acquire nearly 25 million shares of the fund it issued between February 19th and March 3rd. This gold fund is not a typical exchange-traded fund (ETF) in that it is registered as an exchange-traded commodity, and it is unprecedented for the sale of unregistered shares of an exchange-traded product.

The U.S. Securities and Exchange Commission (SEC) delivered a Wells Notice to Pacific Investment Management Co. concerning its sales of the Pimco Total Return exchange traded fund (ETF). The Wells Notice is an indication to recommend that the SEC commence a civil action against the company. Pimco allegedly artificially boosted the returns of the Pimco Total Return ETF. The SEC is looking in to the valuation of smaller-sized positions in non-agency mortgage-backed securities that the ETF purchased between its inception and June 30, 2012, as well as Pimco’s compliance policies and procedures.

If you invested money in the Pimco Total Return ETF fund, please call our securities law firm at 312-332-4200 to speak with one of our attorneys. The call is free with no obligation. We may be able to help you recover your investment losses in the Financial Industry Regulatory Authority (FINRA) arbitration forum.

The Financial Industry Regulatory Authority (FINRA) filed claims recently against Ahsan R. Shaikh, Ron Y. Itin and El Asset Management. They entered into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA. El Asset Management allegedly conducted a securities business while maintaining insufficient net capital, failing to report to FINRA statistical and summary information about customer complaints, and various recordkeeping violations. For this, the company was censured and fined $75,000. Between July 2008 and April 2012, Shikh and Itin were in charge of the firm’s supervisory system, and they failed to maintain and establish a proper and reasonable one. They did not conduct reviews that were designed and supposed to be put in place to prevent excessive trading in customer accounts. Therefore, excessive trading happened.

Both respondents implemented an email “flagging” system to supervise their representatives’ electronic communication with the public. This system targeted certain words or phrases during random searches of the email database, and flagged words or phrases for further review. This method, however, failed to prevent misleading emails that were sent to the public. These emails were designed to predict the performance of securities, but failed to provide information that would provide a sound basis for those predictions, and did not disclose risks. The emails were also sent in foreign languages, but El did not follow procedures to review foreign language emails. The languages included Spanish, Korean, Vietnamese and Portuguese. These emails were not to be sent from registered representatives’ personal email accounts, but at least 47 of them were. This is against FINRA procedures and rules.

In the time period, El and Itin did not identify red flags of high trading volume and high commissions in customer accounts. On one occurrence, a customer was charged $110,626 in commissions for 89 trades. Another was charged $191,530 for 136 trades. The cost equity ratio for these trades was off, demonstrating that excessive commissions were charged. El and Itin also did not conduct proper suitability reviews in leveraged exchange-traded funds (ETF) accounts. During the relevant time period, El Asset entered into 25 settlement and release agreements with various customers. The language for these agreements was ambiguously interpreted and was not clear. Specifically, the agreements stated: that firm customers agree not to “commence or prosecute, or assist in the filing, commencement or prosecution in any government agency, arbitral tribunal, self-regulatory body or court any claim or charge against El Asset Management.” This was also against FINRA rules and regulations. For this, the firm was fined $25,000 and censured. Shaikh was suspended from the industry for one month in a supervisory capacity and Itin was suspended for one month, to be served upon completion of Shaikh’s suspension.

Stoltmann Law Offices is investigating Matt Maberry, a financial advisor from Alton, Illinois. Maberry is accused of buying and selling a number of non-traditional exchange-traded funds (ETFs), and inverse or leveraged mutual funds. The Financial Industry Regulatory Authority (FINRA) also accused him of recommending that his clients buy “steepener” notes, which are notes that are designed to increase in value as the gap between long and short interest rates increase. Maberry was also accused of trading Class A shares of inverse and leveraged mutual funds in client accounts. “A” shares of mutual funds tend to have up front commissions of 2 to 5 percent, but Maberry recommended his clients hold the funds for less than a year, sometimes only a few months. FINRA deemed this practice unsuitable. The regulatory authority also alleged that Gregory H. Bray, Maberry’s supervisor at Alton Securities Group, Inc. failed to properly supervise him while he was employed there. Bray was fined $7,500 and suspended for six weeks.

Maberry worked for IDS Life Insurance Company in Minneapolis, Minnesota from May 1989 until June 1989, American Express Financial Advisors in Minneapolis from May 1989 until June 1989, Newhard, Cook & Co Inc in St. Louis, Missouri from June 1989 until September 1989, Advest Inc. in Hartford, Connecticut from September 1989 until March 1992 and Longrow Securities Inc. in St. Louis from February 1992 until October 1996. He is currently registered with Alton Securities Group in Alton, Illinois. Alton Securities Group may be held responsible for money losses you may have suffered if you invested with Matt Maberry. Please call our securities law firm based in Chicago, Illinois at 312-332-4200 to speak to an attorney about your options.

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