FINRA Fines Broker $1.8mill in Sale of ETFs

Nicholas Rowe and his firm, Focus Capital Wealth Management, Inc. of Bedford, New Hampshire, were found liable in a case alleging negligence, civil fraud, and other misdeeds, involving the sale of risky ETFs (Exchange Traded Funds) to nine investors, according to a ruling by a Financial Industry Regulatory Authority (FINRA) arbitration panel. Some of these investors were in their fifties and sixties, including two widows. Rowe was ordered to pay $1.8 million to the investors.

The Reuters article goes on to explain that leveraged and inverse ETFs were designed to amplify short-term returns by using debt and derivatives and are considered more suitable for professional traders than for long-term investors or anyone does not want a high-risk portfolio. In 2009, FINRA and other regulators began issuing warnings about the sale of leveraged and inverse ETFs because they worried that brokers were selling them to buy-and-hold investors - a strategy likely to cause heavy losses.

The Reuters article says that FINRA arbitration may be the last hope for some investors whose advisers guided them to leveraged and inverse ETFs and then mismanaged the investments.

Investors in the Rowe case were all heavily concentrated in leveraged and inverse ETFs. That strategy is nearly guaranteed to lead to losses, since the investments effectively require betting on whether the market is going up or down.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. If you invested with Nicholas Rowe or Focus Capital Wealth Management, Inc., or had losses in other leveraged and inverse ETFs, call: 888-760-6552, or you may visit our website and complete the online form at: https://www.securitieslawyer.com.