The Guiliano Law Firm Announces Filing of Securities Arbitration Claims Before FINRA

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Apr 28, 2011, 06:00 ET

PHILADELPHIA, April 28, 2011 /PRNewswire/ -- The Guiliano Law Firm, P.C., has announced the filing of securities arbitration claims before the Financial Industry Regulatory Authority (FINRA) on behalf of investors suffering losses in Inverse and Leveraged Exchange Traded Funds or ETFs.

Many investors were sold these securities based upon the notion that they could be a long term hedge. However, leveraged ETFs are controversial trading instruments. Leveraged ETFs are meant to double, or in some cases triple, the daily performance of a particular index. Because leveraged ETFs are bundles of derivatives, investors cannot buy and hold them the way they do similarly benchmarked ETFs. Derivatives have a time value portion that decays as each day goes by, and are not appropriate long term investments.

Both FINRA and the SEC found that certain leveraged ETFs produced negative returns, are too complicated and too risky for most retail investors, and typically are not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.

In June 2009, FINRA reminded firms of their sales practice obligations in connection with leveraged and inverse ETFs. In particular, recommendations to customers must be suitable and based on a full understanding of the terms and features of the product recommended; sales materials related to leveraged and inverse ETFs must be fair and accurate; and firms must have adequate supervisory procedures in place to ensure that these obligations are met.

In August 2009, most major brokerage stopped permitting solicited purchases of these ETFs in traditional brokerage accounts and also told investors and regulators that: "Unsolicited purchases will be permitted only subject to enhanced oversight and review."

The Guiliano Law Firm, P.C., located in Philadelphia, represents public customers in FINRA Securities Arbitrations in claims against stockbrokers and investment professionals for investment fraud, the sale of unsuitable investments, negligence, breach of fiduciary duty, and the failure to supervise. For more information contact us 877-SEC-ATTY or visit www.stockbrokerfraud.com.

About The Guiliano Law Firm:

Nicholas J. Guiliano has extensive experience in the litigation of securities related matters as a stockbroker fraud lawyer in customer claims against brokerage firms for fraud in connection with the sale of securities principally in arbitration before FINRA and the NYSE Department of Arbitration.

SOURCE The Guiliano Law Firm