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Soreide Law Group, PLLC, is a securities litigation firm that is committed to helping victims recover financial losses due to fraudulent or negligent conduct on behalf of stock brokers or financial advisors. We are able to represent investors nationwide in the handling of their securities... More
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Securities Lawyer Blog
    May 2, 2012 2:36 PM

    Soreide Law Group is filing FINRA Arbitrations on behalf of investors who invested in Direxion 3x Funds: FAZ, ERY, BGZ, and TZA.

    Leveraged ETF's have now imploded and regulators and investors are finally beginning to pay attention. Major fines have just been handed down to the industries top brokerage houses for sales practices relating to leveraged ETFs.

    These funds seek 3 times the performance or benchmark of the fund or index they are tracking. They are highly leveraged and were designed for a day trade (not buy and hold). Many brokers misunderstood the makeup of these leveraged exchange traded funds or ETFs and held them as long positions. Over time, due to the derivative nature of these products, many of these named ETFs began to cannibalized themselves and not perform as promised.

    If your stock broker sold you leveraged ETFs such as FAZ, ERY, BGZ or TZA from Direxion and held them for more than several days which resulted in losses, you may be able to recoup those losses through the FINRA arbitration process.

    FINRA released a Regulatory Notice 09-31 which specifically outlined brokerage firms sales practice obligations relating to leveraged and inverse exchange-traded funds. FINRA notice 09-31 states, "Most leveraged and inverse ETFs 'reset' daily, meaning that they are designed to achieve their stated objectives on a daily basis. Due to the effect of compounding, their performance over longer periods of time can differ significantly from the performance (or inverse of the performance) of their underlying index or benchmark during the same period of time." Many brokers failed to heed this warning and were negligent in their recommendations to hold these positions for the long term.

    Several firms were recently fined $9 million by FINRA for selling risky ETFs as a buy and hold strategy to their unsuspecting investors. These firms include household names such as Wells Fargo, UBS, Citigroup, Morgan Stanley. Soreide Law Group is also investigating similar sales practices by smaller brokerage firms that may have made the same negligent recommendations including J.P. Turner & Co., National Securities Corporation, Rockwell Global Capital, K.C. Ward Financial, Merrill Lynch, Newbridge Securities Corporation, Obsidian Financial, and Legend Securities.

    Soreide Law Group warned investors through our blog and marketing materials as early as 2009 against buying and holding leveraged ETFs, and we have been filing lawsuits related to sales practices surrounding leveraged ETFs against brokerage firms nationwide since then.

    If you or a loved one invested in a leveraged ETF that was held as a long position at the advice of your broker call (888)760-6552 or visit

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