10.0David P Neuman
(720) 599-3505

Sigma Financial Settles with FINRA Over Sales of Inverse and Leveraged ETFs


Sigma Financial Settles with FINRA Over Sales of Inverse and Leveraged ETFs

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Sigma Financial Settles with FINRA Over Sales of Inverse and Leveraged ETFs

Have you lost money investing in ETFs with Sigma Financial Corp.?


We are currently investigating allegations made against Sigma Financial Corp., Inc., an Ann Arbor, Michigan-based securities brokerage firm.  FINRA (the Financial Industry Regulatory Authority) brought a regulatory action against Sigma Financial Corp., making allegations that it failed to supervise the sales of non-traditional ETFs, including inverse ETFs or leveraged ETFs.


FINRA alleged that Sigma Financial Corp. failed to have procedures in place to adequately supervise the sales of inverse and leveraged ETFs, between May 2014 and December 2016.  FINRA alleged that Sigma Financial Corp. made 1,475 transactions in inverse and leveraged ETFs during this time, earning commissions of about $292,000.  Sigma Financial Corp. settled the above-mentioned allegations with FINRA and paid a $100,000 fine.


ETFs (or Exchange Traded Funds) have become increasingly popular over the last 20 years.  ETFs are typically used to track and replicate the performance of an index, such as the S&P 500, the Russell 2000, or the Dow Jones.  ETFs are popular, because investors can invest in a basket of securities that provides diversification but with the simplicity of being a single stock.


Many companies have also created leveraged or inverse ETFs.  Leveraged ETFs try to replicate the performance of a particular index, but attempt to replicate the performance by doubling or even tripling the index.  As an example, the Proshares Ultra Russell 2000 ETF seeks to double the performance of the Russell 2000 Index.


Inverse ETFs also try to replicate the opposite (or even multiple opposites) of a particular index.  For example, Ultrashort QQQ Shares seeks a return of two times the inverse (-2x) of the daily performance of the NASDAQ-100 Index. Leveraged and inverse ETFs can be useful investment tools for investors seeking intra-day trading.


However, inverse and leveraged ETFs are often misused, by retail investors and even financial advisors.  The regulators and others have long-warned the securities industry about the dangers of inverse and leveraged ETFs.  These are designed to be day-trading vehicles, but often financial advisors recommend holding these ETFs in an investor’s accounts for weeks or even months.


Israels & Neuman PLC is a securities and investment fraud law firm with offices in Ann Arbor, Michigan; Denver, Colorado; and Seattle, Washington.  We represent investors in FINRA arbitration proceedings in all 50 states, including investors in Michigan.  Attorney Aaron Israels is licensed to practice law in Michigan, he grew up in Holland, Michigan and also lived for many years in the Detroit area.  Our attorneys have represented over one thousand investors against many brokerage firms in the past, including Sigma Financial Corp.


Click to view:  Sigma Financial FINRA AWC


If your advisor recommended investments in ETFs that caused you losses, through Sigma Financial Corp., please CONTACT US at 720-599-3505 for a free case evaluation.



Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency. Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency. All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact. This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice. Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis. In contingent representation, clients may still be liable for costs.
10.0David P Neuman


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