Stifel, Nicolaus & Century Securities Must Pay More than $1M Over Inverse and Leveraged ETF Sales

Financial Industry Regulatory Authority says that Century Securities Associates, Inc. and Stifel, Nicolaus & Company, Inc. must pay almost $1 million over the sale of inverse and leveraged exchange-traded funds. Stifel Financial Corporation (SF) owns both firms.

According to the SRO, for more than four years Century and Stifel recommended non-traditional ETFs that were not suitable to customers because a number of its representatives did not fully comprehend the products’ features or the risks involved. The instruments were marketed to retail investors with conservative investment goals. A number of customers ended up holding the investments for long periods and they suffered net losses.

The regulator says that Century and Stifel failed to set up proper training for their representatives and lacked the reasonable supervisory systems for the sale of these non-traditional ETFs. Instead, the firms oversaw these investments the way they did traditional ETFs. Also, they did not set up a procedure to deal with the risk for the longer-term holding periods involving these complex investments.

As part of the settlement, Stifel will pay close to $340,000 in restitution to 59 clients and a $450,000 fine. Century will pay over $136,000 to six clients and a $100,000 fine.

Leveraged and Inverse ETFs
These financial instruments “reset” every day. They are supposed to fulfill their objectives daily to allow their performance to diverge right away from that of the benchmark or underlying index. Even if there is a gain in the index’s long-term performance an investor can still sustain huge losses. The risk of loss is even bigger when the markets are volatile.

由于ETF是复杂的投资，因此仅建议他们向能够处理其承担风险的投资者建议。这意味着企业必须适当培训和监督其代表，因此没有向客户提出不合适的建议。

如果您认为监督不足，不适当的建议或/和其他一些违反职责是您的ETF投资损失的原因，请立即联系我们的ETF欺诈律师之一。

FINRA命令Stifel，Nicolaus和Century Securities支bob200体育付罚款和赔偿金，总计超过100万美元，以销售杠杆和反向ETF，以及相关的监督性缺陷, Business Wire/FINRA, January 9, 2014

Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors, SEC.gov

More Blog Posts:
FINRA命令J.P. Turner向84个客户支付$ 707,559的资金归还基金, Stockbroker Fraud Blog, December 10, 2013

New Hampshire Investment Adviser Focus Capital Wealth Management Accused of Elder Financial Fraud to Pay Exchange Traded Fund Victims $2.4M, Stockbroker Fraud Blog, March 14, 2013

SEC Charges Filed Against Stifel, Nicolaus & Co. and Former Sr. VP David Noack Over CDO Sales to Wisconsin School Districts, Institutional Investor Securities Blog, August 11, 2013