10.0David P Neuman
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LIST OF FIRMS Fined by SEC for VIX-linked Exchange Traded Notes

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18
Nov

LIST OF FIRMS Fined by SEC for VIX-linked Exchange Traded Notes

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LIST OF FIRMS Fined by SEC for VIX-linked Exchange Traded Notes

Five Advisory Firms Fined for Failures with VIX-linked Exchange Traded Notes and Funds

Have you lost money investing in the iPath S&P 500 VIX short-term futures ETN (ticker symbol VXX) or ProShares VIX Short-Term Futures ETF (ticker VIXY)?  We are looking into allegations made by the Securities and Exchange Commission (SEC) against several brokerage and advisory firms related to the sales of VXX and VIXY.  The SEC brought regulatory actions against five separate firms, which include Benjamin F. Edwards & Company, Royal Alliance Associates, American Portfolios Financial Services, Securities America, and Summit Financial Group.

The SEC alleged that Benjamin F. Edwards & Company, Royal Alliance Associates, American Portfolios Financial Services, Securities America, and Summit Financial Group failed to adequately supervise the sales of exchange traded products, including iPath S&P 500 VIX short-term futures Exchange Traded Notes.  VXX and VIXY are designed to provide investment exposure to market volatility by replicating a continuously maintained portfolio of one-month and two-month futures contracts of the CBOE volatility index (or VIX).  Because the VXX and VIXY exchange traded notes and funds continuously buy new contracts, there are increasing costs when the investment is held for longer periods.  Thus, the products are only meant to be held for very short periods.

The SEC alleged that these firms had clients holding VXX or VIXY for months or even years.  The increased risk from the extended holding periods often led to losses for the investor.  To settle these allegations, the firms paid the following fines:

  1. Benjamin F. Edwards agreed to pay $716,000 in disgorgement and a $650,000 fine;
  2. Royal Alliance agreed to pay $502,000;
  3. American Portfolios Financial Services agreed to pay $653,000;
  4. Securities America agreed to pay $603,000; and
  5. Summit Financial Group agreed to pay $606,000 in disgorgement and a $600,000 fine. 

Brokerage and advisory firms like Benjamin F. Edwards & Company, Royal Alliance Associates, American Portfolios Financial Services, Securities America, and Summit Financial Group have a responsibility to adequately supervise all representatives who are registered through their firm.  Firms also must take steps to ensure that their advisors follow all securities rules and regulations, as well as internal firm policies.  When brokerage and advisory firms fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers. 

Israels & Neuman PLC is a securities and investment fraud law firm with offices in Denver, Colorado; Seattle, Washington; Phoenix, Arizona; and Ann Arbor, Michigan.  We represent investors in FINRA arbitration proceedings in all 50 states. Our attorneys have represented over one thousand investors against many brokerage firms in the past, including against Royal Alliance, American Portfolios Financial Services, and Securities America.

If you lost money with iPath S&P 500 VIX short-term futures ETN (ticker symbol VXX) or ProShares VIX Short-Term Futures ETF (ticker VIXY), please CONTACT US at 720-599-3505 for a free evaluation of your case.

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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