RBC Capital Markets, the brokerage unit of Royal Bank of Canada (NYSE:RBC) agreed to pay investors $2.9 million to cover losses on leveraged and inverse leveraged exchange traded funds to settle an action brought by Massachusetts securities regulators who found that highly volatile, nontraditional funds did not fit with some clients' investment objectives. In addition, the firm was fined $250,000.
"This settlement details an inexcusable set of facts where the company was selling products it did not understand, and when it finally realized the risk and pitfalls of these investments it did not immediately restrict their marketing," Mr. Galvin, a Massachusetts regulator, said.
A related action against agent Michael Zukowski, who left RBC in November 2010 has not been resolved.
Leveraged and inverse ETFs ampligy short-term market movements daily using sophisticated securities known as derivatives and are not generally suitable for anyone except professional traders with a high risk profile.
If you have suffered losses on exchange traded funds, ETFs, you may be able to recover those losses. We have been helping investors recover stock market losses for over twenty years.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.