exchange-traded products

On November 8, 2021, the Financial Industry Regulatory Authority (“FINRA”) and Aegis Capital Corp. (“Aegis Capital”) entered into Letter of Acceptance, Waiver, and Consent No. 2016051704305 (the “AWC”). After conducting an investigation, FINRA alleged in the AWC that from July 2014 through December 2018, Aegis Capital failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 as it pertains to excessive trading. As a result, Aegis Capital failed to identify trading in hundreds of customer accounts that were potentially excessive and unsuitable, including trading conducted by eight Aegis Capital registered representatives in the firm’s Melville and Wall Street branches whose trading in the accounts of 31 firm customers resulted in an average annualized cost-to-equity ratio (or break-even point) of 71.6%, an average annualized turnover rate of 34.9, combined customer costs (including commissions, markups or markdowns, margin interest, and fees) of more than $2.9 million, and cumulative losses of $4.6 million.

Additionally, the FINRA AWC alleged from July 2014 to June 2019, Aegis Capital failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 when selling leveraged, inverse, and inverse-leveraged Exchange-Traded Funds (Non-Traditional ETFs) to retail customers. As a result, Aegis Capital failed to identify customers who purchased and held Non-Traditional ETFs for extended periods of time or whose purchase was inconsistent with their recorded investment objective, risk tolerance, or finances.

Customers of Aegis Capital, including customers that have been notified that they may be receiving restitution, should consult with a securities arbitration law firm. If you or a loved one were a customer of Aegis Capital, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

On July 19, 2021, UBS Financial Services Inc. (“UBS”) and the Securities and Exchange Commission (“SEC”) settled charges related to UBS’s failure to adopt and implement written policies and procedures reasonably designed to prevent unsuitable investments in volatility-linked-exchange-traded products (“ETPs”) between January 2016 and January 2018. As a result of UBS’s supervisory failures, financial advisors in UBS’s discretionary Portfolio Management Program (“PMP”) purchased and held an exchange-traded product called iPath S&P 500 VIX Short-Term Futures ETN (“VXX”) for their advisory clients for durations that were inconsistent with the purpose of the product, as described in the offering documents, and as described to UBS in a meeting with representatives of the issuer of VXX.

Without admitting to the SEC’s findings, UBS agreed to a censure, and disgorgement and prejudgment interest of $112,274 and a civil penalty of $8 million, which will be distributed to investors harmed by UBS’s conduct.

Advisory customers of UBS who have suffered losses due to VXX investments in their discretionary or “managed” accounts that have not been made whole should contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

Articles Tagged with exchange-traded products

Aegis Capital Corp. Ordered to Pay Nearly $2.7 Million for Supervisory Failures Related to Rampant Excessive and Unsuitable Trading

UBS Settles with SEC Over Unsuitable VXX Investments