Morgan Wilshire Securities Settles with SEC Over ETF Sales
Have you lost money investing in ETFs through Morgan Wilshire Securities? We are currently investigating allegations made against Morgan Wilshire Securities, a Garden City, New York-based securities brokerage firm. The Securities and Exchange Commission (SEC) alleged that from January 2015 to March 2019, Morgan Wilshire failed to adequately supervise the sales of inverse exchange traded funds (ETFs), without regard for the holding period of these investments. To settle these allegations with the SEC, Morgan Wilshire Securities agreed to pay a penalty of $75,000; disgorgement of over $87,000; and over $16,000 in interest.
ETFs (or Exchange Traded Funds) have become increasingly popular over the last 20 years. Many companies have also created leveraged or inverse ETFs. Inverse ETFs 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, these investments 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; Ann Arbor, Michigan; Seattle, Washington; and Phoenix, Arizona. We represent investors in FINRA arbitration proceedings in all 50 states, including New York and throughout the New York City area. Our attorneys have represented over one thousand investors against many brokerage firms in the past.