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TAG | etf losses

Jan/13

23

FINRA Awards Investor $1.3mill From Sale of ETF’s by Wells Fargo

Comments off · Posted by Securities Lawyer in FINRA

Moshar v. Wells Fargo, FINRA ID # 11-00556 (Los Angeles, CA, 1/9/2013)
A couple was recently awarded $1,333,300 in compensatory damages through a FINRA arbitration. The claimants charged Wells Fargo with the following: breach of fiduciary duty, breach of written contract, fraud by misrepresentation and omission, failure to supervise and control, and violation of federal and state securities laws and statutory and common law as well as NASD Rules of fair practice and NYSE Rules.
The causes of the action related to multiple investments in Exchange Traded Funds or ETF’s.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding ETFs, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Oct/12

31

Did You Invest in ETF’s?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, is currently investigating the marketing and sales of non-traditional exchange traded funds (ETFs) to investors. Many of the country’s leading banks – including Citigroup, Morgan Stanley, UBS and Wells Fargo – were recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for more than $9.1 million over their failure to supervise retail sales of leveraged and inverse exchange-traded funds (ETFs).

In addition to supervisory failures, FINRA said the banks failed to have “a reasonable basis” for recommending the products to investors.

“The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers,” said J. Bradley Bennett, FINRA enforcement chief, in a statement.

“Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products,” he added.

The fines were issued as follows:

Wells Fargo – $2.1 million fine and $641,489 in restitution

Citigroup – $2 million fine and $146,431 in restitution

Morgan Stanley – $1.75 million fine and $604,584 in restitution and

UBS – $1.5 million fine and $431,488 in restitution.

Both the Securities and Exchange Commission (SEC), the North American Securities Administrators Association and FINRA have issued separate and joint warnings to investors about leveraged and inverse exchange-traded funds in recent months.

Regulators are concerned about the increasing complexity of the products, their lack of transparency, and the potential to cause significant financial losses to the investors who do not completely understand how inverse and leveraged funds actually work.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding ETFs, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Jul/12

11

Warning by FINRA on ETNs

Comments off · Posted by Securities Lawyer in FINRA

FINRA, the Financial Industry Regulatory Authority Inc., issued an investor alert about the risks of ETNs, exchange-traded notes, after an investigation of Credit Suisse and Barclays ETNs this year.

ETNs are often thought of as as ETFs, exchange-traded funds, but in reality, the two are very different.  ETNs are promissory notes written by banks to deliver the returns of an index, and don’t actually hold anything, whereas ETFs, hold a stocks or bonds that trade intraday on an exchange. A bank may stop issuing new shares and cause trouble for an ETNs. This can happen  because the maximum number of shares has been reached or the bank is no longer able to hedge effectively against the index.  If no new shares are issued the ETN functions like a closed-end fund and continued demand can drive shares to a premium over the net asset value.

Barclays’ iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (GAZ), shares were at a high of 134% of its NAV in March — meaning investors were paying more than $2 for $1 of the ETN’s exposure. It’s now at a 32% premium.

Credit Suisse VelocityShares Daily 2X VIX Short-Term ETN (TVIX) stopped issuing new shares in February. Doubled in value but when Credit Suisse Group AG resumed issuing shares in March, the ETN’s share price fell to the NAV, losing $172 million in a single day.

JPMorgan Alerian MLP Index ETN (AMJ) halted the issuing of shares last month and is now trading at a premium of nearly 1%.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you have investment losses call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com. 

Soreide Law Group, PLLC., representing investors nationwide.

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May/12

7

ETFs Need Closer Attention, Says Senator Reed

Comments off · Posted by Securities Lawyer in FINRA

This past Tuesday, May 1st., FINRA, the Financial Industry Regulatory Authority, Inc. fined four major brokerages $9.1 million for selling complex ETFs (Exchange Traded Funds) to investors whose portfolios were otherwise conservative. 

Without admitting or denying the charges, the brokerges will be paying $7.3 million in fines, and $1.8 million in restitution to the clients who bought inverse and leveraged ETFs.  Those brokerages are:  Citigroup Global Markets Inc, Morgan Stanley & Co., LLC, Wells Fargo Advisors, LLC, and UBS Financial Services.

The chairman of the Senate Banking Subcommitte on Securities, Insurance, and Investment, Sen. Jack Reed, D-RI, announced that he will follow up on the hearing he held last October on ETFs with another hearing in the next few weeks.

“My hearing last fall shined a light on these products, which may be affecting market structure, volatility and price discovery and has the potential to harm investors,” Sen. Reed said. “I think this market deserves more attention from both domestic and foreign regulators, and I plan to hold another hearing on ETFs and related issues in the near future.”

Finra felt he brokerages it disciplined had failed to educate their reps about the complexities – and dangers – of leveraged and inverse ETFs, which hold derivatives and magnify market movements. The brokers then sold them to uninformed investors.

“The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficientily train their sales force before the products are offered to retail customers,” Brad Bennett, Finra executive vice president and chief of enforcement, said in a statement. “Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products.”

Soreide Law Group warned investors through our blog and marketing materials as early as 2009 against buying and holding leveraged ETFs, and we have been filing lawsuits related to sales practices surrounding leveraged ETFs against brokerage firms nationwide since then.
 
If you or a loved one invested in a leveraged ETF that was held as a long position at the advice of your broker call (888)760-6552 or visit http://www.securitieslawyer.com.

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