FSC Securities Corp Fined For Alleged Failure to Supervise Leveraged ETF Sales

On August 10, 2017, the Financial Industry Regulatory Authority Inc. (FINRA) announced that it has fined FSC Securities Corp., $100,000 and ordered a $492,000 payment to clients for FSC's alleged failure to reasonably supervise leveraged ETFs from January of 2009 through September of 2014.
FSC Securities Corp, is one of the Advisor Group’s broker/dealers.  Several firms nationwide have been receiving fines due to alleged problems supervising trades of leveraged, inverse exchange traded funds (ETFs).  These leveraged ETFs use leverage to amplify returns of a stock index and are not designed for the buy and hold investor. FSC Securities Corp. joins a growing list of firms paying penalties over ETF investments.  Morgan Stanley paid an $8 million penalty allegedly related to single inverse ETF investments recently, and Wedbush Securities paid $675,000 over a series of alleged trading and clearing problems involving a client redemption and trading of leveraged ETFs.
According to a FINRA report, over the last five years, FSC Securities Corp executed nearly 6,500 purchases of leveraged, or inverse, non-traditional ETFs in close to 1,400 retail client accounts which were worth nearly $92 million and in turn generated $603,000 in commissions.
FINRA also stated that FSC Securities Corp allegedly failed to establish and maintain a supervisory system that complied with the proper procedures, including written procedures, designed to ensure that the firm’s offerings of non-traditional ETFs complied with NASD and FINRA rules.  FINRA felt the firm’s supervisory system was not sufficient to address the unique features and risks involved with these complex products.
There are many firms paying significant restitution and fines stemming from problems supervising trades of the high-risk and complex leveraged, inverse exchange traded funds. If you suffered losses due to the recommendations of FSC Securities Corp, or another broker/dealer, call Soreide Law Group and speak to a securities lawyer regarding the possible recovery of your investment loss at:  888-760-6552.
Soreide Law Group represents clients nationwide before FINRA and we operate on a contingency fee basis.  Let our years of experience work for you.