David A. Noyes & Co. Settles with FINRA Over Sales of Inverse and Leveraged ETFs
Have you lost money investing with David A. Noyes & Co. in ETFs? We are looking into allegations made against David A. Noyes & Co. (now known as Sanctuary Securities), an Indianapolis, Indiana-based securities brokerage firm. FINRA (the Financial Industry Regulatory Authority) brought a regulatory action against David A. Noyes & Co., making allegations that it failed to supervise the sales of non-traditional ETFs, including inverse ETFs or leveraged ETFs.
FINRA alleged that David A. Noyes & Co. failed to have procedures in place to adequately supervise the sales of inverse and leveraged ETFs, between January 2014 and December 2018. David A. Noyes & Co. settled the above-mentioned allegations with FINRA and agreed to pay a $160,000 fine and $370,000 in restitution.
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 Denver, Colorado; Seattle, Washington; Ann Arbor, Michigan; and Phoenix, Arizona. We represent investors in FINRA arbitration proceedings in all 50 states, including investors in Indiana. Our attorneys have represented over one thousand investors against many brokerage firms in the past, including David A. Noyes & Co.
View David A. Noyes & Co./Sanctuary Securities BrokerCheck Report