FINRA suspended former Wells Fargo Advisors broker Jeffrey David Daggett of Temecula, California and fined him $20,000 for unsuitable recommendations related to non-traditional (leveraged and inverse leveraged) exchange-traded funds (ETFs). The $20,000 fine and suspension follows a series of customer disputes settled for a combined $73,603.88, from Daggett's time at Morgan Stanley's Pasadena and Temecula branches.
According to FINRA's sanctions, Daggett recommended and traded non-traditional ETFs while associated with Wells Fargo, concentrating two accounts in a triple leveraged as well as an inverse triple leveraged ETF, while additionally investing the customer's funds in a "volatile and speculative" exchange traded note.
The findings state Daggett's recommendations were not consistent with his customer's investment objectives of moderate growth and income. Further investigation of the ETN and non-traditional ETF prospectuses indicate warnings were present within the documents advising investors that the products "may not be suitable" for conservative investors or those looking for an intermediate or long term investment.
For instance, even though the ETN and ETFs were not meant to be held long-term, FINRA found that Daggett's recommended products were held in the customer's accounts for "more than one daily trading session," for periods ranging from one month to two years.
FINRA also found that Daggett's recommendations on ETN and non-traditional ETFs were not reasonable for his client, given the customer's financial situation, investment objectives and needs. In turn, the customer reported total losses from the unsuitable ETN and non-traditional ETF investments as approximately $88,000.
If you have invested with SoCal broker Jeffrey David Daggett or with any broker, financial adviser, or firm whose recommendations of complex or risky products were unsuitable for your financial situation or given your investment objectives, and such unsuitability has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.