INRA Fines, Censures Parkland Securities For Failure To Supervise Non-Traditional ETFs
The Financial Industry Regulatory Authority (“FINRA”) sanctioned Parkland Securities LLC (CRD#: 115368, Ann Arbor, Michigan) on March 7, 2019 for insufficient supervision. Evidently, the firm submitted a Letter of Acceptance, Waiver and Consent #2016052300601 on February 27, 2019, agreeing to a censure and $20,000.00 fine. FINRA stated Parkland failed to establish, maintain and enforce rules for reviewing non-traditional ETFs in violation of FINRA Rules 3110 and 2010.
Evidently, Parkland did not create, enforce and maintain an effective supervisory construct or use guiding principles for supervising non-traditional ETFs. The findings state that Parkland failed to show that it complied with securities regulations, laws and FINRA rules. Apparently, Parkland Securities had supervisory procedures for ETFs – just not ones they followed. Here’s what happened:
FINRA Stated Parkland Failed To Supervise Registered Representatives’ Non-Traditional ETFs
Specifically, FINRA stated that a product manager was supposed to determine the type of investor who was the right fit for non-traditional ETFs. After assessing that information, FINRA stated that the product manager was supposed to communicate the suitability information in department trainings. Eventually, through these trainings, Parkland registered representatives would learn about non-traditional ETF suitability.
The product manager, under the firm’s guidelines, was also supposed to include suitability information in Parkland Securities marketing contents. The AWC stated that the firm did not cooperate with its own procedures. More specifically, Parkland Securities produced no suitability information about non-traditional ETFs for trainings. Because of this, registered representatives did not learn about risks of non-traditional ETFs.
Parkland Fails To Determine Whether Non-Traditional ETFs Are Suitable For Investors
Notably, FINRA found that Parkland’s supervision structure did not exist in such a way that it could detect registered representatives’ potential unsuitable non-traditional ETF transactions. Specifically, Parkland lacked procedures to review investors’ non-traditional ETF holding periods. Apparently, the firm only used a daily blotter, which was not sufficient. FINRA stated that Parkland Securities investors held non-traditional ETFS for long periods, some cases extending beyond 2 years. For this reason, Parkland’s supervision systems were unresponsive in FINRA’s view.
Worse yet, FINRA stated that Parkland Securities has not entirely fixed their problem. Notably, FINRA stated that the firm has yet to contact some customers about the suitability of non-traditional ETFs. According to FINRA, Parkland Securities has not identified whether some investors should not invest in Non-traditional ETFs. Not only that, but the firm waited until FINRA probed them to contact its customers invested in non-traditional ETFS for extended periods. Because of this, Parkland violated FINRA Rules 3110 and 2010.
Investors who have experienced losses by investing in non-traditional ETFs,
including inverse ETFs and leveraged ETFs, through Parkland Securities should contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represent clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.