Published On: August 5, 2015

Stoltmann Law Offices is investigating BestVest Investments, a securities brokerage firm based out of Media, Pennsylvania. The Financial Industry Regulatory Authority (FINRA) brought a regulatory action against BestVest Investments, claiming that they failed to establish an adequate supervisory system to supervise the sales of leveraged and inverse exchange-traded funds (ETFs). These are also sometimes called non-traditional ETFs. These funds are designed to be held for less than a day, but BestVest allegedly failed to monitor how long their customers held these ETFs. BestVest agreed to a censure and a fine of $15,000.

ETFs are used to track and replicate the performance of an index, such as the S&P 500, the Russell 2000 or the Dow Jones. They oftentimes attempt to double or triple the index. They are popular because investors can invest in a basket of securities that provides diversification but with the simplicity of being a single stock. Leveraged ETFs are often risky and are not suitable for all investors. A registered representative has a duty to take into account his client’s portfolio, age, net worth and investment sophistication before recommending and executing trades on behalf of that client. Also, brokerage firms don’t always do their due diligence when researching funds such as ETFs. Many times, the registered representatives are not knowledgeable of the product and recommend holding them in an investor’s account for weeks or even months. According to a FINRA regulatory notice: “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.”

If you invested money in ETFs with BestVest Investments, please call our Chicago-based securities law firm to speak to an attorney. We sue firms such as BestVest for not doing their due diligence on investment products. We may be able to help you sue BestVest for financial losses in the FINRA arbitration forum. The call is free with no obligation. We take cases on a contingency fee basis only.

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