Oppenheimer & Company

Public records provided by the Financial Industry Regulatory Authority (FINRA) on June 28, 2016 indicate that FINRA has sanctioned broker-dealer Oppenheimer & Company $2.25 million, in addition to ordering restitution of more than $716,000, following allegations the firm sold leveraged, inverse, and inverse-leveraged exchange-traded funds to retail customers “without reasonable supervision, and for recommending non-traditional ETFs that were not suitable.” The securities and investment fraud law firm Fitapelli Kurta is interested in speaking to investors who have complaints regarding ETFs sold by Oppenheimer & Company.

According to a FINRA news release, in 2009, Oppenheimer & Company established procedures that forbade its representatives from soliciting customers to invest in non-traditional ETFs, as well as from effecting unsolicited ETF purchases, unless those customers had certain qualifications, such as liquid assets exceeding $500,000. FINRA alleges that Oppenheimer “failed to reasonably enforce these policies,” resulting in the continued solicitation of ETF purchases and execution of unsolicited ETF transactions by its representatives. “From August 2009 through September 30, 2013,” according to FINRA, “more than 760 Oppenheimer representatives executed more than 30,000 non-traditional ETF transactions totaling approximately $1.7 billion for customers.”

In a statement, Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said: “Written procedures are worthless unless accompanied by a program to enforce them. While Oppenheimer’s procedures prohibited solicitation of non-traditional ETFs, the absence of any meaningful compliance effort resulted in its representatives continuing to solicit unsuitable non-traditional ETF purchases, including a number involving elderly investors.”

According to the release, FINRA additionally held that Oppenheimer failed to establish or employ supervisory procedures to “monitor the holding periods for non-traditional ETFs,” resulting in certain customers holding the investments “for weeks, months and sometimes years, resulting in substantial losses.” One example cited by FINRA is an “89-year conservative customer with annual income of $50,000 held 96 solicited non-traditional ETF positions for an average of 32 days (and for up to 470 days), resulting in a net loss of $51,847.”

Oppenheimer & Company consented to FINRA’s findings, though it did not admit or deny the charges.

An exchange-traded fund (ETF) is a security that tracks assets traded on a stock exchange. It owns the underlying assets and divides this ownership into shares. Leveraged ETFs are non-traditional ETFs that trade financial derivatives and debt rather than stock. They multiply returns on the underlying assets by as much as 2x or 3x, tracking daily performance and resetting their portfolios at the end of each day. Because they reset, their gains and losses are tracked as a multiple of the previous day’s gain or loss. So while they stand to amplify your gains, they may also magnify your losses. Inverse ETFs, also known as “short funds,” deliver the opposite of the tracked index or benchmark; some track broad indices while others are specific to certain sectors, or linked to currencies or commodities.

If you have lost money investing in non-traditional exchange-traded funds through Oppenheimer & Company, you may be able to collect a recovery. Call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. All cases are taken on contingency: we only receive payment if and when you recover money. You may have a limited window to file your claim, so we suggest you avoid delay. Call 877-238-4175 now to speak to an attorney for free.