Exchange Traded Funds

Sanctuary Wealth To Pay $530K Over Alleged Supervisory Failures Involving Exchange-Traded Fund Sales

Published on: July 26, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Sanctuary Wealth Ordered To Pay Over $370K in Restitution to ETF Customers

Independent broker-dealer Sanctuary Wealth, formerly David A. Noyes & Co., has been censured by the Financial Industry Regulatory Authority (FINRA). It must now pay a $160K fine and over $370K in restitution for its failure to supervise certain financial products, including leveraged and inverse exchange-traded funds (ETFs), and its brokers’ external activities.

According to the self-regulatory organization (SRO), going as far back as 2014 through the end of 2018 the brokerage firm failed to address in a “reasonable” manner the “unique features and risks” involving selling inverse and leveraged ETFs, which Sanctuary was required to do according to FINRA’s Rule 2111 regarding suitability.

Royal Alliance, Securities America, & Other Firms To Pay $3M for Allegedly Unsuitable iPath S&P 500 VIX Short–Term Futures ETN & Other ETP Sales

Published on: November 23, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Retail Investors Were Allegedly Told To Hold Exchange-Traded Products for Too Long

In separate settlements reached with the US Securities and Exchange Commission (SEC), Royal Alliance Associates, Securities America Advisors, Summit Financial Group, Benjamin F. Edwards & Co., and American Portfolio Financial Services / American Portfolio Advisers will pay over $3M in penalties and restitution for their allegedly unsuitable sales of exchange-traded products (ETPs) to customers between January 2016 and April 2020. The firms did not deny or admit to the findings.

All of the respondents recommended and sold iPath S&P 500 VIX Short–Term Futures ETNs (VXX), which utilize short-terms futures contracts to try tracking the S&P 500 Index’s implied volatility. It also is considered one of the largest and most volatile ETPs and among the worst-performing from last year.

Ex-American Northcoast Securities Broker Dominic Tropiano Allegedly Defrauded ETF Investors

Published on: September 9, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Barred Ohio Stockbroker Accused of Over 500 Unsuitable Exchange Traded Fund Transactions

Dominic Anthony Tropiano, a former registered broker in Ohio, is now facing US Securities and Exchange Commission (SEC) fraud charges. The regulator contends that Tropiano placed more than 500 unsuitable and unauthorized trades in 40 customer accounts belonging to retail customers, including elderly investors.

These transactions and investment strategies involved leveraged exchange-traded funds (ETFs), which are complex, very risky securities. As a result, customers allegedly lost over $1M. Meanwhile, Tropiano earned at least $115K in bonuses and commissions.

Some Investors Lose Big As ETFs, ETNs & Other Structured Products Fail During COVID-19

Published on: June 15, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Structured Product Losses Stun Retail Investors Who Should Never Have Been Told By Brokers To Buy Them

The recent market turbulence caused by the coronavirus has caused many investors’ portfolios to suffer huge losses, and nowhere is this more evident as the losses suffered by those who invested heavily in structured products, including exchange-traded notes (ETNs) and exchange-traded funds (ETFs).

And while yes, no one could have anticipated COVID-19 battering the economy and the markets, for many investors, they likely shouldn’t have and wouldn’t have gotten involved in these complex investments were it not for the recommendation of their stockbroker.

As United States Oil Fund Plunges 30%, Retail ETF Investors Should Worry About Losses

Published on: April 24, 2020 | by Shepherd Smith Edwards & Kantas, LLP

ETF Investors Of United States Oil Fund May Not Have Known Full Extent Of Risks

Our investment fraud lawyers are offering free case consultations to investors who’ve lost money in the United States Oil Fund (USO) after it dropped 30%. The exchange-traded security continues to make changes to its structure in an attempt to stave off more losses. Part of this now involves giving itself the leeway to get into long-term contracts. The USO exchange-traded fund (ETF), which keeps track of oil prices, is popular among retail investors.

Unfortunately, many of these investors think they are betting on oil prices’ long-term rise and do not fully comprehend how the futures market operates or that these types of funds hold primarily short-dated oil futures contracts and should never be held long-term.

Market Volatility Caused by COVID-19 Negatively Impacts Leveraged ETNs & Inverse ETPs

Published on: April 13, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Inverse and Leveraged ETNs and ETFs Are Shuttering

As the novel coronavirus (COVID-19) continues to adversely affect the markets and cause crude oil prices to drop, the number of inverse and leveraged exchange-traded notes (ETNs), exchange-traded funds (ETFs) and exchange-traded products (ETPs) involving crude oil that have been forced to close, delist, or automatically accelerate continues to grow and this has caused more losses for investors.

Right now, our broker fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are working with leveraged and inverse ETF and ETP investors throughout the US to help them explore their legal options.

Wells Fargo Settles Inadequate Supervision of Non-Traditional ETFs Claim for $35M

Published on: March 4, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Wells Fargo Sold Non-Traditional ETFs to Retail Investors

If you were an investor who suffered losses in non-traditional exchange-traded funds (ETFs) that you feel were unsuitable for you yet were recommended by a Wells Fargo investment advisor or broker, our ETF fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm) would like to offer you a free case consultation.

Wells Fargo Advisors Financial Network and Wells Fargo Clearing Services recently agreed to pay $35M to settle US Securities and Exchange Commission (SEC) claims. These claims accused the two Wells Fargo entities of lax supervision of their registered investment advisors (RIAs). As well as the brokers who recommended certain complex non-traditional ETFs to retirees and other retail advisory and brokerage customers.

Shepherd Smith Edwards and Kantas Investigates Investor Claims Involving Non-Traditional ETFs

Published on: February 7, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Non-Traditional Exchange-Traded Funds Are Not Suitable For Every Investor

Our securities fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are looking into complaints by investors whose brokers may have inappropriately recommended that they invest in non-traditional exchange-traded funds (ETFs).

These types of ETFs are leveraged, inverse and inverse-leveraged exchange-traded funds and they are not for every investor. This is definitely the type of investment that a financial representative and its broker-dealer should assess for suitability on a customer-by-customer basis.

Shepherd Smith Edwards and Kantas Investigates Kalos Capital Broker Darren Kubiak Over GPB Investments and Exchange-Traded Funds Sales

Published on: December 17, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Kalos Capital Broker Sold GPB Private Placements and LIETFs

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is investigating customer complaints involving Darren Michael Kubiak, a Kalos Capital broker who is currently suspended from the industry for three months. Kubiak is one of the Kalos representatives who sold GPB Capital Holdings private placements to investors. GPB is accused of operating a $1.8B Ponzi scam.

Kubiak Suspended By FINRA

Financial Sherpa Accused of Cherry Picking

Published on: September 2, 2019 | by Shepherd Smith Edwards & Kantas, LLP

In a settlement reached with the US Securities and Exchange Commission (SEC), Financial Sherpa and its principal James L. Beyersdorf will pay more than $232K of disgorgement, over $15K of prejudgment interest, and a $188K penalty for allegedly defrauding investment advisory clients by engaging in a cherry picking scam. The regulator contends that Beyersdorf allocated a disproportionate amount of option trades that were profitable to himself and his wife while distributing the unprofitable ones to the firm and his clients. Beyersdorf oversaw some $6.7M in assets for 13 individual investors.

According to the SEC, he purchased options in the firm’s omnibus trading account during the morning, distributing the trades later in the day. The regulator claims that because of the allegedly illegal trading, over six months– from October 2017 and April 2018– Beyersdorf and his wife ended up with a net positive one-day return of more than 45% on the options trades that were sent to their accounts. Meantime, the negative one-day return for the firm’s individual clients that received the unprofitable trades was also 45%. The Commission said that the odds of the “disparate performance” occurring by chance was under one-in-a million.

Also, while the registered investment advisory’s strategy for the majority of its clients involved placing about 90% of each of their assets in exchange-traded funds (ETFs) and 10% in short term options trading, the account of Beyersdorf’s wife traded nearly exclusively in options and did not hold any ETF positions.