ETF Sales by Morgan Stanley Lead to $1.75 Million FINRA Fine

On
May 1, 2012, FINRA fined Morgan Stanley $1.75 million, censured the firm
and ordered restitution of $604,584 to customers for selling leveraged
and inverse exchange-traded funds (non-traditional ETFs) “without
reasonable supervision”.

The letter of acceptance waiver and consent between FINRA and Morgan Stanley contains the following findings:

  • Morgan Stanley consented to a fine of $100,000 in April 2011 for supervisory issues related to the sale of unit investment trusts
  • In March 2009, they were fined $3 million and required to pay restitution of $2 million to retirees on findings relating to unsuitable investments in IRA and retirement accounts
  • In June 2007, they were fined $500,000 for inadequate supervision regarding the monitoring of guardian accounts established for minors in connection with medical malpractice settlements
  • From January 2008
    to June 2009 the company failed to maintain a supervisory system in
    connection with the sale of non-traditional ETF’s such as leveraged, inverse and inverse-leveraged exchange traded notes
  • Certain Morgan Stanley brokers did not have an adequate understanding of
    non-traditional ETFs before recommending these products to customers
  • Certain Morgan Stanley brokers made unsuitable recommendations of non-traditional ETFs to investors with a primary investment objective of income
  • During the time frame examined by FINRA Morgan Stanley customers bought and sold over $4.78 billion of non-traditional ETFs
  • Certain
    customers with a primary objective of income held non-traditional ETFs for several months including a 74
    year old  with a  net worth of less than $300,000 who was sold a single ETF representing 25% of his account value which lost $13,000 and an 89 year old customer with a primary objective of income and a net worth of under $200,000 who was allocated over 59% of the account to a single non-traditional ETF

If
you are a
conservative investor who has suffered losses on ETFs purchased from Morgan Stanley
or any other brokerage firm, you may be able to recover those losses.
Please contact our
office to discuss your legal rights. Nationwide representation. Free
consultation. 561 391 1900.

www.RexSecuritiesLaw.com

FINRA Fines UBS $1.5 Million for Sale of Exchange Traded Funds

On
May 1, 2012, FINRA fined UBS $1.5 million, censured the firm
and ordered restitution of $431,488 to customers for selling leveraged
and inverse exchange-traded funds (non-traditional ETFs) “without
reasonable supervision”.

The letter of acceptance waiver and consent between FINRA and UBS contains the following findings:

  • UBS consented to a fine of $2.5 million and restitution of $8.25 million in August 2011 for supervisory issues related to the sale of Lehman Brothers Principal Protected Notes
  • In June 2009, they were fined $100,000 relating to the sale of unsuitable short-term sales of closed end funds
  • From January 2008
    to June 2009 the company failed to maintain a supervisory system in
    connection with the sale of non-traditional ETF’s
  • Certain UBS brokers did not have an adequate understanding of
    non-traditional ETFs before recommending these products to customers
  • Certain UBS brokers made unsuitable recommendations of non-traditional ETFs to conservative investors
  • During the time frame examined by FINRA UBS customers bought and sold over $4.5 billion of non-traditional ETFs
  • Certain
    customers with conservative investment objectives and/or risk tolerance
    profiles held non-traditional ETFs for several months including a 64
    year old conservative customer with a $290,000 net worth who lost 43% of his investment in an ETF

If you are a
conservative investor who has suffered losses on ETFs purchased from UBS or any other brokerage firm, you may be able to recover those losses. Please contact our
office to discuss your legal rights. Nationwide representation. Free
consultation. 561 391 1900.

www.RexSecuritiesLaw.com

Wells Fargo Fined $2.1 Million for ETF Sales

On May 1, 2012, FINRA fined Wells Fargo $2.1 million, censured the firm and ordered restitution of $641,489 to customers for selling leveraged and inverse exchange-traded funds (non-traditional ETFs) “without reasonable supervision”.

The letter of acceptance waiver and consent between FINRA and Wells Fargo contains the following findings:

  • Wells Fargo consented to a fine of $350,000 in August 2009 for supervisory issues related to the sale of annuities
  • In May 2009, they were fined $1.4 million for supervisory issues related to delivery of offering documents
  • In February 2009, they were fined $4.41 million supervisory issues related to the abuse of breakpoints in connection with the sale of mutual funds.
  • From January 2008 to June 2009 the company failed to maintain a supervisory system in connection with the sale of non-traditional ETF’s
  • Certain Wells Fargo brokers did not have an adequate understanding of non-traditional ETFs before recommending these products to customers
  • During the time frame examined by FINRA Wells Fargo customers bought and sold over $9.9 billion of non-traditional ETFs
  • Certain customers with conservative investment objectives and/or risk tolerance profiles held non-traditional ETFs for several months including a 65 year old conservative customer with a $50,000 net worth who lost $25,000 on ETF

If you are a conservative investor who has suffered losses on ETFs purchased from Wells Fargo, you may be able to recover those losses. Please contact our office to discuss your legal rights. Nationwide representation. Free consultation. 561 391 1900.

www.RexSecuritiesLaw.com

FINRA Fines Citi, Wells Fargo, UBS & Morgan Stanley for ETF Sales

The Financial Industry Regulatory Authority (FINRA) fined Citigroup, Morgan Stanley, UBS AG and Wells Fargo $9.1 million and ordered restitution to clients of $1.8 million on May 1, 2012, for selling leveraged and inverse exchange-traded funds  (ETF’s) “without reasonable supervision” and for making sales which were unsuitable to the purchasing investor.

FINRA warned the industry in June 2009 that ETFs were difficult to understand  (Regulatory Notice 09-31) and not a good fit for long-term investors.

ETFs, which mimic indexes and are traded like stocks, use swaps or derivatives to amplify daily index returns. Inverse funds are designed to move in the opposite direction of their underlying benchmark. Since you may have had to read this paragraph twice to understand it, ETFs are not for everyone.

Here are details on the findings FINRA made on the Wells Fargo case. Click here for the details on the UBS case. Here for the details on the Morgan Stanley case.

Here for the details on the Citigroup case.

If you have suffered losses on ETFs, you may be able to recover damages through FINRA arbitration. We have been helping investors recover stock market losses for over twenty years. Nationwide representation. Free consultation. 561 391 1900

www.RexSecuritiesLaw.com

Wells Fargo Broker Steals from Sick Child: Expelled by FINRA

Ralph Edward Thomas, Jr. of Reistertown, MD, most recently with Wells Fargo Advisors, was sentenced to four years in prison and ordered to pay $838,000 in restitution for stealing money from several customers. One of the customers was a a trust fund set up for a child suffering from cerebral palsy.

FINRA announced the bar from the industry in its March disciplinary actions. The U.S. Attorneys Office for the District of Maryland alleged that Thomas had been stealing from customers for a few years. Over $750,000 was taken from the child’s trust fund, which had been funded with a $3 million medical malpractice settlement. The fraud began as early as 2001. Thomas joined Wells Fargo in 2004 and was discharged in 2010. Prior to that time he worked for Invest Financial Corporation and SunTrust Securities, Inc.

If you have questions about losses in your brokerage account or other matters related to an investment account, do not hesitate to contact us. Nationwide representation. Free consultation. 561 391 19000

www.RexSecuritiesLaw.com

Nationwide representation of victims of stockbroker fraud and the malpractice of investment professionals.

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