Investor Loss Attorneys

Our Skilled ETF Fund Investor Loss Attorneys Continue to Investigate Brokers Over Alerian MLP And Others

Morningstar Lists 15 Funds as “Wealth Destroyers” 

Shepherd Smith Edwards & Kantas, LLP Investor Loss Attorneys (investorlawyers.com) remains hard at work investigating the brokerage firms that may have unsuitably sold investments in Alerian MLP ETF (AMPL) to investors leading to significant losses in their portfolios. Shepherd Smith Edwards & Kantas Investor Loss Attorneys has already represented a number of investors who lost substantial savings in AMPL and similar risky/poor-performing funds.

AMLP is an oil and gas master limited partnership that was recently included in a list of what Morningstar portfolio strategist Amy Arnott called the 15 “wealth destroyer” funds that caused the most shareholder losses during the 10-year period concluding at the end of 2021. Nearly all of these are exchange-traded funds:

• Alerian MLP ETF
• ProShares Ultra VIX Short-Term Futures (UVXY)
• ProShares UltraPro Short QQQ (SQQQ)
• PIMCO Commodity Real Ret Strat A (PCRAX)
• ProShares UltraShort S&P500 (SOS)
• iShares MSCI Brazil ETF (EWZ)
• ProShares Short S&P500 (SH)
• ProShares UltraPro Short S & P500 (SPXU)
• VelocityShares Daily 2x VIX ST ETN (TVIXF)
• Krane Shares CSI China Internet ETF (KWEB)
• PIMCO StocksPLUS Short A (PSSAX)
• Direxion Daily Small Cap Bear 3x ETF (TZA)
• Velocity Shares 3x Long Natural Gas ETN (UGAZF)
• ProShares UltraShort 20+ Year Treasury (TBT
• Direxion Daily S & P 500 Bear 3x ETF (SPXS)

Arnott notes that the majority of these funds are “heavy on specialized and volatile categories.” In addition, several of the funds are “leveraged” funds – seeking to obtain multiple returns on an index – or “inverse” funds – seeking to profit from an underlying index losing value.  These specialized and volatile funds are too risky for most retail investors, which is why it is so important that brokers and financial advisors only market and sell them to clients for whom they are suitable and in line with their investment goals and risk tolerance levels.

Unfortunately, the unsuitable recommendation of complex ETFs to investors is an all too common occurrence and may be grounds for a Financial Industry Regulatory Authority (FINRA) lawsuit against a broker, financial advisor, or financial firm if serious portfolio losses result. In November 2020 alone, the U.S. Securities and Exchange Commission (SEC) charged five brokerage firms over their allegedly unsuitable complex ETF sales to retail customers. Not long after, the regulator launched a probe into such purported broker negligence practices. Overconcentrating a customer in exchange-traded funds, failure to supervise exchange-traded fund sales, and making misrepresentations and omissions about these investments can be other reasons for pursuing damages should there be substantial investor losses.

What Should You Do If You Suffered Serious ETF Losses?

Complex ETFs can be vulnerable to market volatility. For example, leveraged ETFs, such as the ProShares UltraPro Short QQQ, take on huge risks in an attempt to generate huge returns. These are sophisticated funds that are not for inexperienced investors.  Depending on the fund, such losses may also bring significant tax implications.

In addition, often brokers and financial advisors will earn commissions for selling ETFs, which can, unfortunately, compel some of them to try to convince investors that would be better off with more conservative investments to purchase these highly complex and risky securities.

Over the years, retail customers, retirees, as well as high-net-worth investors, and institutional investors have sustained serious ETF investment losses in exchange-traded products. While not all investment losses warrant grounds for pursuing damages against your financial advisor, if stockbroker fraud or carelessness was a factor, filing a brokerage firm arbitration claim is one way to try and obtain financial recovery. Although the arbitration forum is less time-consuming than going to court, arguing your exchange-traded fund loss claim before a panel of arbitrators is not something you want to do without seasoned securities litigators fighting for you.

If you contact Shepherd Smith Edwards and Kantas, we can help you assess whether you have valid reasons for pursuing an ETF fraud lawsuit. Should we agree to work together, we can prepare your investor loss claim, conduct the necessary due diligence to prove liability, and represent you in FINRA arbitration.

Call (800) 259-9010 today.