Finra Fines Stifel Financial Regarding Complex ETF

Posted on January 23rd, 2014 at 9:25 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

Two Stifel Financial Corp. brokerage units, Stifel, Nicolaus & Co. Inc. and Century Securities Associates Inc., were ordered by Finra to pay more than $1 million in fines and restitution for selling leveraged and inverse exchange-traded funds (ETFs) that were unsuitable for the investorsbetween January 2009 and June 2013.

Finra warns that brokerages must conduct reasonable due diligence on those and other complex products, sufficiently train their sales force and have adequate supervisory systems in place before offering them to retail investors.

Sales of inverse and leveraged ETFs have got regulator’s attention since 2009. In daily or short term trading, ETFs use futures or derivatives to multiply the daily returns of an index, or perform the opposite way against an index. However, in a longer term, the EFT’s returns can stray significantly from the intended daily result, and thus are not suitable as a buy and hold investment. 

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services. 

Related Attorneys: James J. Eccleston


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Thank you so very much for your guidance, patience, and expertise.

Beth and Steve K.


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