When the Financial Industry Regulatory Authority (FINRA) announced its intention to bring cases against brokers and their firms who have sold customers unsuitable leveraged and inverse exchange-traded funds (ETFs) or exchange-traded notes (ETNs), it followed up with the barring of registered representative Michael Venable of Texas for selling clients unsuitable investments in leveraged ETFs.
Because leveraged ETFs can be highly volatile securities, they are more suitable for day-to-day professional investors than long-term customers. Nonetheless, FINRA found that Venable continually recommended the highly speculative Direxion ETFs to multiple customers whose ages ranged from 40 to 91 years old and who were long-term customers rather than day-to-day speculative traders. The specific products he recommended and sold were:
- Direxion Daily Financial Bull 3X Shares ("FAS");
- Direxion Daily Financial Bear 3X Shares ("FAZ");
- Direxion Energy Bull 3X Shares ("ERX");
- Direxion Daily Small Cap Bear 3X Shares ("TZA") and
- Direxion Daily Cap Bull 3X Shares ("TNA").
Furthermore, Venable was found to have attempted to compensate for his improper recommendations by engaging in excessive trading of customer accounts, thereby driving up his own commission while failing to maximize his customers' returns.
Venable had engaged in these unauthorized and prohibited practices while associated with the firm Morgan Keegan & Company, Inc., though his employment was terminated on April 15, 2010. He has not been employed in the securities industry ever since and now that FINRA has barred him, Venable is prohibited from returning.
If you suspect a broker or firm has engaged in unsuitable or improper practices that have proven harmful to your investments or interests, call The Law Offices of Jonathan W. Evans & Associates at 800-699-1881 for a consultation.