Broker Dealer Financial Services Corp. or “BDFS” recently accepted and consented to FINRA’s findings that the firm failed to establish and maintain a supervisory system to ensure that its sale of exchange traded funds or “ETFs” complied with securities industry regulations.
FINRA also accused the firm, as noted in the Letter of Acceptance, Waiver & Consent, of failure to investigate nontraditional ETFs before its brokers recommended them to customers, failure to properly train personnel regarding ETFs, and failure to adequately supervise activity in its customers’ ETF accounts.
This activity, says FINRA, occurred between March 2009 and April 2012. During this period, FINRA found that BDFS made ETF recommendations to more than 200 of its customers. Due to the alleged failure to understand the risks and features of the ETFs, FINRA states that BDFS could not have known whether these ETFs were suitable for investors.
Exchange traded funds can be incredibly risky investments. These securities trade on stock exchanges are usually very complicated to understand, leaving even many brokers unsure of the risks the ETF could pose to your finances. They can also be risky because a lot of them use short sales, swaps, futures contracts, and other derivatives to get results. If you would like more information about ETFs, watch Attorney Dave Meyer’s video.If you lost money investing in an ETF recommended to you by a broker or financial advisor, we invite you to contact an investment loss lawyer at Meyer Wilson for a free review of your legal rights and options.