The Arkansas Securities Department fined two FINRA member firms, Morgan Keegan & Co. (now merged into Raymond James) and Stephens Inc. a total of $40,000. In addition, the Arkansas Securities Department ordered Morgan Keegan to pay $45,000 in restitution for improper sales of nontraditional exchange-traded funds ("ETFs").
Both firms were disciplined for allowing registered agents to sell nontraditional ETFs in an inappropriate manner. For Morgan Keegan, it was because of the actions of one of its advisers while Stephens Inc. was fined because it failed to produce written guidance as to when nontraditional ETF sales would be appropriate or inappropriate.
According to the findings, Morgan Keegan financial adviser Keith H. Freeman sold the nontraditional ETFs to a couple nearing retirement age whose investment objectives were specifically "less aggressive."
Because nontraditional ETFs, which are often designed to be traded daily or fairly often, carry additional risks for the long term, the Arkansas Securities Department determined these nontraditional ETFs "are therefore generally appropriate for relatively aggressive investors."
According to Freeman's FINRA BrokerCheck Report, Freeman "willfully violated or willfully failed to comply" with Arkansas rules regarding unsuitable trades, excessive trading and unauthorized trading.
As a result, Arkansas permanently revoked Freeman's agent of a broker-dealer registration in that state while FINRA suspended him for failure to comply with the "arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance."
Though a settlement was reached for $45,000 in restitution, BrokerCheck reveals the jilted couple initially sought alleged damages of $201,000.
Morgan Keegan discharged Freeman in 2011 for an alleged episode of check kiting. Freeman maintains this violative conduct was "all personal" and that "no client accounts were involved."
If you have invested with Morgan Keegan, Stephens Inc., broker Keith H. Freeman or with any firm or financial professional whose marketing, solicitation or sales of nontraditional ETFs or other complex investments was inappropriate or unsuitable and has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News: Inverse and Leveraged ETFs (Arkansas Business)