FINRA Bars Broker For Selling Direxion ETFs

Mar. 21, 2012 6:13 PM ET
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Contributor Since 2012

This blog is written by Robert H. Rex, Esq. who is a securities attorney and a passionate advocate for investors rights. With over 30 years of legal experience, 25 of which have dealt almost exclusively with the recovery of stockmarket and investment losses for mostly elderly clients, he and his staff can assist you or your loved ones determine the proper course of action should you suffer unexplained investment losses. Mr. Rex has represented thousands of individuals both nationwide and abroad. He has recovered damages from all of the major brokerage firms as well regional and local broker-dealers. Rex Securities Law-DIckenson Murphy Rex & Sloan- offices in Austin, Texas 512-329-2870  and Boca Raton, FL. 561-391-1900 Toll Free 877-224-3199

We have warned investors in the past to be wary when buying ETF's (Exchange Traded Funds). This is because many contain risks that are not apparent and not always explained and may not be suitable for retired persons and unsophisticated investors.

The Wall Street Journal recently reported that FINRA barred permanently Michael Venable, a broker from Tyler, Texas, for putting 10 of his middle class clients in unsuitable and highly leveraged ETFs.

FINRA found that these investments were not suitable for unsophisticated clients with conservative investment objectives and risk profiles. The clients were put into Direxion ETFs. Some of the Direxion ETFs invested by shorting parts of the market and trading on margin. Investors were not made aware of these risks when they purchased them. The investors ranged in age from 40 to 91 and had incomes frm $25,000 to $50,000 a year.

In addition, FINRA found that the broker traded the account excessively, an abuse we see all too often. One account with a $17,000 balance had commissions of $9,600 making it impossible for the account to ever realize any profit.

If you have losses in Direxion or have questions about the way your brokerage account is being handled, please do not hesitate to contact us at 561 391 1900. We have been helping investors nationwide recover stock-market and investment losses for over twenty years.

Visit our securities law website at RexSecuritiesLaw

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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