BestVest Investments has accepted and consented to FINRAs findings that accuse the firm of failing to establish and maintain a supervisory system to monitor ETF transactions. According to FINRA, from January 2012 until August 2014, BestVest allowed its brokers and advisors to recommend ETFs to their customers even though these individuals did not have appropriate training to make these recommendations.
BestVest also allegedly did not provide any training or guidelines as to when recommending these ETFs to customers might be appropriate or inappropriate, nor did the firm give its supervisory personnel any guidelines for monitoring ETF transactions.
What are exchange-traded funds?
ETFs can return either the multiple of the underlying benchmark, the inverse of that underlying benchmark, or both. ETFs are designed to issue these returns over the course of one trading session, which is usually about a day.
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Why are exchange-traded funds risky?
ETFs are risky because of their volatility. Their performance often differs drastically from day-to-day, so much so, that FINRA has overtly warned broker-dealers to avoid recommending ETFs to retail investors who plan to hold the investment for more than a single trading session, with few exceptions.
In response to FINRA’s findings, BestVest has agreed to a censure and a fine of $15,000. Additionally, FINRA ordered the firm to pay restitution to one customer in particular in the amount of $2,132.31 plus interest.
If you would like to learn more about exchange-traded funds, Meyer Wilson has a number of helpful resources:
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