Exchange-Traded Funds (ETFs)

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Investors trust their brokers to help them make financial decisions that minimize risk and maximize gain. But as some investors in exchange-traded funds (ETFs) are learning, that trust is sometimes misplaced.

An ETF is a low-cost investment product representing a basket of securities that track an index such as the Dow Jones Industrial Average. ETFs have evolved over the years, with some types becoming more complex, such as leveraged and inverse ETFs. Leveraged and inverse ETFs are designed to meet their stated performance objectives on a daily basis. The performance of these products over a period longer than a day can differ significantly from their stated daily performance objectives.

In June and July of 2009, the Financial Industry Regulatory Authority (FINRA) issued a warning stating that inverse and leveraged ETFs are “extremely complicated and confusing products” and not suitable for most retail investors. The Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) issued similar statements. The warnings stem from a disturbing trend in which brokerage firms may have been marketing such ETFs to retail investors as a viable long-term investment.

In August 2009, a group of investors in a leveraged inverse ETF filed a lawsuit against the financial advisory firm, ProShares Advisors LLC. The suit alleges that ProShares caused the investors to suffer substantial losses by not disclosing the risks involved in investing in the ETF.

Did You Experience a Major Financial Loss as a Result of an ETF?

If you believe you were misled into investing in an ETF, which caused you to experience severe financial loss, you may be entitled to reparations. Fill out the form on this page or call Sokolove Law today at 877-490-6522 for a free case evaluation.


Author:Sokolove Law
Sokolove Law

The Sokolove Law Content Team consists of writers and editors who work alongside the firm’s attorneys and case managers. The team strives to present the most accurate and relevant information for those who need legal help.

Last modified: March 6, 2019