Tag: stockbroker negligence

Industry Groups Sue Over New DOL Fiduciary Rule

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Several industry and trade groups have filed suit in Texas federal court challenging the Department of Labor’s new fiduciary rule that would require financial professionals who advise retirement accounts to act in their “client’s best interest” when recommending investment products. We question why anyone would oppose such an obvious, common sense obligation.

The current standard only requires professionals to promote products that are “suitable” for the investor, rather than in the client’s best interest. Opponents of the new rule argue that the heightened standard would impose unjustifiable costs on small businesses and professionals who must implement it, claiming it is arbitrary and capricious, and contrary to the law. Of course, one could argue that if a company cannot afford to act in its client’s best interest, then that company should not be in business.

According to opponents, the requirements for the new DOL fiduciary rule  would violate the First Amendment by restricting advisers’ ability to advise clients and by barring firms from including class action waivers. Opponents also claim that the new rule would subject investment advisors to potentially costly litigation in the future. We believe that investment advisors should be exposed to litigation if they fail to act in their clients’ best interests.

Proponents of the new rule argue that the heightened standard would help protect investors’ retirement accounts by making sure that brokers adhere to products that are in clients’ best interest.

Under the DOL fiduciary rule, brokers would be exempted and may continue to earn commissions from sales of investment products, provided they pledge to act in their client’s best interests going forward. The rules also exempt a broader class of retirement plan sponsors from owing a fiduciary duty to investors.

Call a Los Angeles Stock Fraud Attorney Today

If you suspect your broker has recommended unsuitable investments in your retirement account and you have suffered investment losses as a result, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles stock fraud attorney today for a consultation to discuss your rights and options.

LPL Financial Agrees to $1.8 Million Penalty for Unsuitable Leveraged ETF Sales

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LPL Financial Agrees to $1.8 Million Penalty for Unsuitable Leveraged ETF Sales

Brokerage firm LPL Financial has agreed to pay $1.8 million to settle Massachusetts regulatory charges that the firm improperly marketed and sold risky exchange-traded funds (ETFs) to 200 Massachusetts investors. Massachusetts securities regulators claimed that LPL violated securities laws concerning the sales, marketing, training and supervision over leveraged ETFs.

Because leveraged ETFs are complex and risky, a number of brokerage firms prohibit their brokers from selling leveraged ETFs to retail investors. But Massachusetts regulators found that LPL Financial permitted its brokers to sell the risky, leveraged Pro Shares Ultra S&P 500 ETF and the Pro Shares Ultra Silver ETFs to retail investors, some of whom had conservative investment objectives.

Leveraged ETFs are designed to be bought and sold in short periods of time. While many sophisticated investors understand the nature of leveraged ETFs, many retail investors mistakenly purchased leveraged ETFs and hold them for long periods of time, as they would with a mutual fund. But holding leveraged ETFs for an extended period of time exposes investors to significant risk of loss. Massachusetts securities regulators found that LPL permitted some customers to hold leveraged ETFs for a year or more. This can happen when brokers do not understand the products and fail to inform investors that leveraged ETFs should not be held long term.

As part of the settlement, LPL will pay $1.6 million in restitution to investors who lost money and $200,000 to the attorney general’s office.

It is important to note that this settlement will not result in payments being made to leveraged ETF investors in other parts of the country. If you lost money in a leveraged ETF call a Los Angeles stockbroker negligence and investment fraud lawyer today for a free case evaluation.