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WARNING! Impending Investigation–DANIEL GRIECO and ETFs

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23
Apr

WARNING! Impending Investigation–DANIEL GRIECO and ETFs

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Daniel Grieco and ETFs

 

We are currently investigating allegations made against Daniel Grieco, a financial advisor from Eatontown, New Jersey.  FINRA (the Financial Industry Regulatory Authority) brought a regulatory action against Daniel Grieco, alleging that he sold non-traditional (leveraged and inverse) ETFs to his customers, from 2008 to 2013. The ETFs were held for more than one day, so Grieco did not understand how the leveraged and inverse ETFs work. To settle these allegations, Grieco was fined $7,500 and suspended for 15 days.

 

Grieco was a financial advisor and registered representative of Royal Alliance Securities from 2007 to August 2010, and with First Allied Securities from August 2010 to the present.  Daniel Grieco worked at a branch office in Eatontown, New Jersey.

 

ETFs

 

ETFs (or Exchange Traded Funds) have become increasingly popular over the last 15 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.

 

In recent years, 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.

 

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.

 

FINRA, the Financial Industry Regulatory Authority, has stated that “inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.”  See FINRA Regulatory Notice 09-31 at page 1.  This Notice reminds members who sell these products to “make every effort to familiarize themselves with each customer’s financial situation, trading experience, and ability to meet the risks involved with such products and to make every effort to make customers aware of the pertinent information regarding the products.”  Id. at 3, citing to NASD Notice To Members 05-26.

 

FINRA has punished other brokers and firms for using leveraged and inverse ETFs improperly.  In an action against Michael Venable, FINRA barred a broker from the industry for using unsuitable leveraged and inverse ETFs with his clients.  See In re Michael Douglas Venable.   FINRA also fined Citigroup, Morgan Stanley, UBS, and Wells Fargo a combined $9.1 million for sales of inverse and leveraged ETFs, in May 2012.

 

Our attorneys have represented over one thousand investors who have been defrauded by their financial advisor or stockbroker.  While we have offices in Denver and the Seattle area, we have also previously represented clients throughout the country.  If you have lost money with Daniel Grieco in leveraged or inverse ETFs, and want to hear about ALL legal options, please visit https://www.israelsneuman.com and go to our CONTACT page or call us at 720-599-3505.

Click to view:  Grieco FINRA AWC

Click to view:  Grieco BrokerCheck 4.23.15

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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