Investment Fraud Lawyer Blog

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• The Dow Jones Industrial Average opened the week at 9605 and, on Monday, moved up 22 points.

• On Tuesday, the Dow Jones Industrial Average rose 57 points.

• On Wednesday, the Dow Jones Industrial Average soared 108 points.

• On Thursday, the Dow Jones Industrial Average dropped 8 points.

• On Friday, the Dow Jones Industrial Average rebounded 36 points and closed the week at 9820.

Continue reading "Page Perry's Market Monitor - September 18, 2009" »

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Posted In: Bank of America , Brokerage Firms , Citigroup/Smith Barney , Derivatives , Employment Issues , Exchange-Traded Funds (ETFs) , Merrill Lynch , Morgan Stanley , Regulatory Developments , Smart Investing Tools , Subprime Mortgage & Collateralized Debt Obligation Problems , UBS

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The Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) have all recently warned that leveraged exchange traded funds (ETFs) are very dangerous investments and not suitable for most retail investors. Moreover, the State of Massachusetts has announced an investigation into the sales practices of brokerage firms selling ETFs.

Continue reading "Concerns about Leveraged Exchange Traded Funds (ETFs) Increase" »

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Posted In: Brokerage Firms , Common Securities Broker Abuses , Derivatives , Exchange-Traded Funds (ETFs) , Investment Advisers , Regulatory Developments , Smart Investing Tools

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The North American Securities Administrators Association (NASAA), the organization of state securities regulators, has published its annual list of top 10 investor traps to avoid. NASAA identified Leveraged Exchange-Traded Funds (ETFs), real estate investment schemes, private placement offerings, natural resources investments, and Ponzi schemes as the greatest potential threats to investor safety. Regarding leveraged ETFs, NASAA warns: “Given their volatility, these funds typically are not suitable for most retail investors.” NASAA also warns investors to be wary of pitches for investments in gold bullion and currency scams, life settlements, entertainment investments, short-term commercial promissory notes, and speculative inventions and new products.

Continue reading "Regulators Issue Warnings about Leveraged Exchange-Traded Funds (ETFs) and Other Toxic Investments" »

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Posted In: Brokerage Firms , Common Securities Broker Abuses , Exchange-Traded Funds (ETFs) , Investment Advisers , Market Developments , Ponzi Schemes , Regulatory Developments , Smart Investing Tools

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Investors have filed a class action complaint against Proshares Advisors LLC and others for violating anti-fraud provisions of the federal securities laws by misrepresenting and failing to disclose material risks associated with an inverse leveraged exchange traded fund (“ETF”), reported Evan Weinberger in his recent 360Law article entitled “Class Alleges ProShares ETF Is ‘Defective Product.’” That fund is the UltraShort Real Estate ProShares fund offered by ProShares Trust. The Complaint notes that sales of such products have “exploded in popularity” in recent years, that ProShares Trust is the fifth largest provider of ETFs in the United States and managed 99% of the inverse and leveraged ETFs in the country.

Continue reading "Class Action Filed Over Leveraged and Inverse ETF Securities" »

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Posted In: Brokerage Firms , Exchange-Traded Funds (ETFs) , Investment Advisers , Regulatory Developments , Securities Arbitration , Securities Class Actions , Smart Investing Tools

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Fidelity Investment has joined Charles Schwab and Morgan Stanley Smith Barney in warning customers about the complexity and risks of Leveraged Exchange Traded Funds (ETFs), reported Daisy Maxey in her article, “Fidelity the Latest to Caution on ETFs,” published in the August 4 Wall Street Journal. Fidelity’s web site now states: “Most [Leveraged ETFs] reset daily and seek to achieve their objectives on a daily basis. Due to compounding, performance over longer periods can differ significantly from the performance of the underlying index.”

Continue reading "Sales of Leveraged and Inverse ETFs Expose Wall Street Firms to Liability for Misrepresentation and Unsuitable Recommendations" »

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Posted In: Brokerage Firms , Charles Schwab , Exchange-Traded Funds (ETFs) , Fidelity , Investment Advisers , Morgan Stanley , Regulatory Developments , Securities Arbitration , Smart Investing Tools

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In her recent article in the Wall Street Journal, Eleanor Laise reports that sales of Leveraged and Inverse Exchange Traded Funds (ETFs) have exploded to $32.8 billion as of June 2009, almost tripling the $11 billion held at the start of 2008. The number of such ETFs has increased to 119, an increase of 86%, over the same period. “The explosive growth in this area over the past year reflects an aggressive sales effort,” said William F. Galvin, Secretary of the Commonwealth of Massachusetts. These products are unsuitable for and should not have been sold to most investors.

Continue reading "Regulators Investigate Sales of Leveraged and Inverse ETFs" »

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Posted In: Ameriprise , Brokerage Firms , Charles Schwab , Citigroup/Smith Barney , Common Securities Broker Abuses , Derivatives , Exchange-Traded Funds (ETFs) , Investment Advisers , Linsco Private Ledger , Morgan Stanley , Regulatory Developments , Smart Investing Tools , UBS

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In the wake of a FINRA Regulatory Notice and a number of articles in the financial press, some brokerage firms say they are either issuing warnings about the products or silently following the discussions surrounding them. So reports Daisey Maxey of the Wall Street Journal in her July 30 article entitled “Warning Signs Up for Leveraged ETFs. Morgan Stanley Smith Barney says its sales of leveraged and inverse ETFs is “under review.” Charles Schwab says it is warning clients to “proceed with extreme caution” because “these funds may not give you the returns you may be expecting.” Schwab says that, while it does not “recommend” leveraged ETFs, investor may purchase them on their own through Schwab. Likewise, TD Ameritrade says it does not “actively sell” leveraged ETFs but they are available on its web platform.

Continue reading "Beware Leveraged and Inverse Exchange Traded Funds" »

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Posted In: Brokerage Firms , Charles Schwab , Citigroup/Smith Barney , Common Securities Broker Abuses , Derivatives , Exchange-Traded Funds (ETFs) , Investment Advisers , Morgan Stanley , Regulatory Developments

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Exchange-traded funds (ETFs) that use leverage or perform inversely (opposite) to an index or benchmark they track are growing in number and popularity. The controversy and danger surrounding these products was featured in recent articles in the Wall Street Journal (“FINRA Urges Caution on Leveraged Funds,” by Daisy Maxey), and InvestmentNews (“Leveraged ETFs: Handle with care”), and in Regulatory Notice 09-31 published by the Financial Industry Regulatory Authority (FINRA). FINRA and others are concerned that leveraged and inverse ETFs are being inappropriately marketed and sold to retail investors for whom they are unsuitable without an adequate explanation of the risks.

Continue reading "Leveraged and Inverse Exchange-Traded Funds (ETFs) Are Dangerous to Investors Financial Health" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Brokerage Firms , Exchange-Traded Funds (ETFs) , Investment Advisers , Regulatory Developments , Securities Arbitration , Smart Investing Tools

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