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FINRA fines JP Turner for Leveraged and Inverse ETF sales

The securities industry self-regulatory body, FINRA, recently required JP Turner & Company to pay $700,000 in restitution to customers who lost money in unsuitable leveraged and inverse exchange traded funds (ETFs).Press Release here.

According to FINRA:

“FINRA found that J.P. Turner failed to establish and maintain a reasonable supervisory system and instead, supervised leveraged and inverse ETFs in the same manner that it supervised traditional ETFs. The firm also failed to provide adequate training regarding these ETFs. In addition, J.P. Turner allowed its registered representatives to recommend these complex ETFs without performing reasonable diligence to understand the risks and features associated with the products. As a result, many J.P. Turner customers held leveraged and inverse ETFs for several months. J.P. Turner also failed to determine whether the ETFs were suitable for at least 27 customers, including retirees and conservative customers, who sustained collective net losses of more than $200,000.”

In June of 2009, FINRA issued a Regulatory Notice (09-31) regarding these Non-Traditional ETFs.  The Notice states:  ‘inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.’

If you suffered losses in your brokerage accounts resulting from your broker’s trading in ETFs, and you would like to discuss your potential claim with an attorney, please contact Greco & Greco.

Posted by Greco & Greco on 12/13 at 11:19 AM
ArbitrationBrokerage FirmsJ.P. TurnerETFFINRAFraudSecurities FraudSuitability

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