Two related brokerage firms–Stifel, Nicholas & Company, Incorporated and Century Securities Associates, Inc.–entered into a settlement with the Financial Industry Regulatory Authority (FINRA) over alleged misconduct in the sales of leveraged and inverse exchange traded funds (ETFs). As part of the settlement, Stifel and Century agreed to pay fines totaling $550,000 and to make restitution totaling $474,613 to a select group of 65 customers who were sold ETFs between January 1, 2009 and June 1, 2013. Presumably, the group of customers chosen to receive redemption consists of customers who had selected a conservative investment objective and had held the ETFs for an unreasonable period of time. In its written findings, FINRA provided a brief description of two customers that are entitled to redemption:
- A Stifel customer with a primary investment objective of “income” who invested in a nontraditional ETF and held if for 18 months that lost $41,000.
- A Century customer with a primary investment objective of “income” who invested in a nontraditional ETF and held if for 2 ½ years that lost $13,600.