FINRA ordered Stifel,
FINRA alleged that between
According to FINRA’s press release on the fines, it also found that Stifel and Century did not have reasonable supervisory systems in place, including written procedures, for sales of leveraged and inverse ETFs. Instead, Stifel and Century supervised transactions in these two fund types in the same manner that they supervised traditional ETFs. Neither firm had a procedure to address the risk associated with longer-term holding periods in the products. Further, both firms failed to ensure that their registered representatives and supervisory personnel obtained adequate formal training on the products before recommending them to customers.
Although neither firm admitted to any wrongdoing, Stifel agreed to pay a
An inverse ETF is designed to produce the opposite return of the index to which it is pegged. In this way, the inverse ETF functions as a “short” of the entire index. Leveraged ETFs use financial derivatives and debt to boost the returns of an underlying index.
The two firms are affiliates of
This is not the largest fine issued by FINRA for selling these types of products. In
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