Investor Lawyers Blog
Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with William Wayne LaRue, a former Stephens Inc. stockbroker. The claims are regarding unauthorized and/or unsuitable trades in inverse and leveraged exchange-traded funds, or ETFs, as well as other products.
Reportedly, in early 2012, one of LaRue’s clients made a complaint that LaRue had executed a series of unauthorized trades on her account prior to his departure. As a result of the complaint, the Arkansas Securities Department reportedly discovered similar problems in other customer accounts, as well as other violations.
“The unauthorized trading was occurring in margin accounts,” says Scott Freydl of the ASD. “In looking at this, we saw there were leveraged and inverse exchange traded funds. That’s when the issue of suitability came up.”
According to the allegations against him, LaRue made unauthorized trades in investments meant to be held for just one day; instead, he held them for days, weeks or months in client accounts. According to the findings, he bought and sold ETFs — short-term, speculative investment s— for one client account that stated “long-term growth with greater risk” as the listed investment objective.
According to securities arbitration lawyers, FINRA and the ASD sanctioned LaRue in October. He was fined $10,000 by each and his securities trading privileges were suspended. The ASD suspension ended on February 21, 2014 and the FINRA suspension ends on March 3. According to ASD findings, Stephens did not have a written compliance policy addressing inverse or leveraged ETF transactions until August 2009. Months later, the firm’s internal computer system could not track the sale of these products to enforce the new written policy. Stephens was fined $25,000 and paid $475,000 to settle a $1.9 million claim by one of LaRue’s clients.
Reportedly, unauthorized trading and the unsuitable sale of inverse and leveraged ETFs increased following the 2008 economic downturn. As a result, investment fraud lawyers have filed numerous arbitration claims on behalf of investors who suffered significant losses in inverse and leveraged ETFs. “We saw an explosion of non-traditional investments,” notes Heath Abshure, ASD Commissioner and last year’s president of the North American Securities Administrator Association. “Instead of sophisticated investors, we started seeing Ma and Pa buy. It’s common to push non-traditional investments during times of market fears.”
LaRue worked for Stephens from October 1998 until August 2011. From September 2011 until his regulatory suspension, LaRue worked for Morgan Keegan & Co. in the Conway offices, and Raymond James & Associates following its acquisition.
If you suffered significant losses as a result of unauthorized and/or unsuitable trades in exchange-traded funds, you may be able to recover your losses through securities arbitration. To find out more about their legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyes.net for a no-cost, confidential consultation.