Securities Regulator FINRA Fines Brokerage Firm Stifel, Nicolaus For Alleged Unsuitable Leveraged ETF Sales

by Gray on January 13, 2014

in Uncategorized

Stifel Nicolaus & Co., a brokerage firm, and its subsidiary, Century Securities Inc., must pay fines and restitution of over one million dollars to settle Financial Industry Regulatory Authority  (“FINRA”) charges concerning alleged unsuitable sales of leveraged exchange-traded funds (“ETFs”) to customers.  FINRA alleged that Stifel and a subsidiary sold leveraged and inverse ETFs to some 65 customers for whom the investments were unsuitable between 2009 and 2013. The regulator said that the firms didn’t have adequate training or written procedures in place to make sure that financial advisers had a “reasonable basis” for recommending the ETFs
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“The complexity of leveraged and inverse exchange-traded products makes it essential for
securities firms and their representatives to understand these products before recommending
them to their customers,” Brad Bennett, A FINRA enforcement official, reportedly stated.  “Firms must also conduct reasonable due diligence on these and othercomplex products, sufficiently train their sales force and have adequate supervisory systems in place before offering them to retail investors.”

Stifel reportedly  sold a total of about $641 million in nontraditional ETFs to retail investors from 2009 to 2013, according to FINRA.

Leveraged ETFs have been known to significantly diverge from their intended performance of tracking underlying benchmarks such as stock indices or commodities, especially under volatile market conditions.  Further, such investments are seldom appropriate for conservative investors due to their inherent risk and price volatility.

Stifel reportedly agreed to pay a fine of $450,000 as well as restitution of $340,000 to 59 customers. 

If you are a customer of Stifel Nicolaus or another brokerage firm who suffered significant losses in leveraged ETFs, you may have a valid securities arbitration claim. 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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