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Articles Tagged with Exchange Traded Funds

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.

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.

SSEK Investigating Financial Advisor That Recommended Unsuitable MLPs To Investors 

Shepherd, Smith, Edwards & Kantas, a law firm specializing in representing wronged investors, is looking into allegations against financial advisors that concentrated their clients in Alerian MLP ETF (“AMLP”) and other oil & gas related master limited partnerships (“MLPs”) amid the significant downturn in oil prices since February.  

What Is The AMLP Fund? 

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. 

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.

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. 

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 

Shepherd, Smith, Edwards & Kantas (“SSEK”), a law firm specializing in representing wronged investors, is looking into allegations against Financial West Group and its broker Daniel Gordon Maughan.

It is alleged that Maughan excessively traded and churned a client’s Trust Account at his member firm. A arbitration complaint has already been filed!  According to his brokercheck, Maughan has also been banned by The Financial Industry Regulatory Authority Inc. (FINRA).

The complaint alleges that by churning the customer’s trust account, Maughan willfully:

F-Squared Investments Inc. has consented to pay $35M to settle Securities and Exchange Commission charges accusing the firm of making false claims regarding the performance of a key investment product. F-Squared admitted that it misled clients for several years about its AlphaSector strategy.

F-Squared is the largest marketer of index products that use Exchange-Traded Funds. The SEC claims that F-Squared falsely advertised that the AlphaSector investment strategy had a successful track record that was based on actual investment performance for real clients when, in fact, the algorithm touted didn’t even exist during the noted time period.

The algorithm was the basis of signals sent from a third party data provider indicating when to sell or buy an investment. F-Squared and Howard Present, its co-founder and ex-CEO, used the signals to develop the AlphaSector, a model portfolio of sector ETFs that could be rebalanced from time to time when the signals changed. After its launch in 2008, AlphaSector’s indexes became the company’s largest revenue source.

The Securities and Exchange Commission is looking at whether Pacific Investment Management Co, artificially upped the returns of a fund that targeted smaller investors. At issue is the way the $3.6B Pimco Total Return ETF (BOND) purchased investments at a discount but depended on higher valuations for the investments when the fund worked out its holdings’ value soon after. This type of move could make it appear as if the fund made rapid gains when it was actually just availing of the variations in how certain investments are valued.

According to The Wall Street Journal, sources familiar with the probe say that SEC investigators have already interviewed firm owner Bill Gross. The regulator could be looking at whether investors ended up with inaccurate data about the performance of the fund. If so, this could be a breach of securities law, even if the wrongdoing wasn’t intentional.

While the probe has been going on for at least a year, it seems to have recently escalated. Other Pimco executives have also been interviewed.

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