Exchange-traded Fund Investors Could Recover Losses

by InvestorLawyers on December 19, 2013

in Arbitration,ETF,FINRA,Retirement,Suitability

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in inverse and leveraged exchange-traded funds or ETFs. Inverse and leveraged exchange-traded funds are supposed to meet daily objectives. As a result, their performance can drop rapidly relative to the underlying index or benchmark.

Exchange-traded Fund Investors Could Recover Losses

According to securities arbitration lawyers, even ETFs with a long-term gain in index performance can result in significant losses for investors. When markets are volatile, the problem is often exacerbated. As a result, ETFs are unsuitable for many investors.

Reportedly, the Financial Industry Regulatory Authority recently ordered J.P. Turner & Co. to pay restitution to 84 clients regarding the unsuitable recommendation and sale of inverse and leveraged ETFs. J.P. Turner did not admit or deny the charges but agreed to pay $707,559 in restitution to settle the charges. The charges also included allegations of excessive mutual fund switches, failure to provide adequate training regarding ETFs and failure to implement an adequate supervisory system.

FINRA also alleges that J.P. Turner allowed registered representatives to recommend these investments without performing due diligence regarding the suitability of these investments to at least 27 customers. These clients reportedly included investors and retirees with conservative risk tolerances. In addition, J.P. Turner is accused of conducting 2,800 unsuitable mutual fund switches, despite red flags. Allegedly, the switching resulted in more than $500,000 in commissions and sales charges paid by 66 clients.

According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations. In addition, those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. If a firm fails to make suitable recommendations, investors may be able to recover losses through FINRA arbitration.

If you suffered significant losses as a result of the unsuitable recommendation of inverse and leveraged ETFs or excessive mutual fund switching, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C.  at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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