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WARNING! Impending Investigation–FELTL & COMPANY and ETFs

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29
Dec

WARNING! Impending Investigation–FELTL & COMPANY and ETFs

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Feltl & Company and ETFs

 

We are currently investigating allegations made against Feltl & Company, a Minneapolis, Minnesota-based securities brokerage firm.  FINRA (the Financial Industry Regulatory Authority) brought a regulatory action against Feltl & Company, alleging that Feltl failed to establish and maintain an adequate supervisory system regarding leveraged and inverse ETFs.  Feltl & Company consented to a censure and a $225,000 fine to settle the claims brought by FINRA.  Feltl has seven branch offices, with six located in Minnesota (Minneapolis, Faribault, Minnetonka, Inver Grove Heights, Wayzata, and St. Cloud), as well as one office in Chicago, Illinois.

 

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 holding 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 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.  Investors who hold inverse ETFs or leveraged ETFs for more than one trading session may not replicate the targeted index and could suffer losses.

 

Our attorneys have represented defrauded investors throughout the country, including investors throughout the Midwest.  If you have lost money in leveraged or inverse ETFs or with Feltl & Company 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 here to view FINRA AWC:  Feltl FINRA AWC

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