Jay Dee Jordan Barred for Unsuitable ETF Trading Resulting in $8 Million Loss, Settling Away

Attorney Advising Disclaimer

FINRA barred former WFG Investments, Inc. representative Jay Dee Jordan of the firm's Oklahoma City branch for engaging in a series of misconduct related to nontraditional exchange-traded funds (ETFs), including unsuitable trading and recommendations, unauthorized use of discretion, mischaracterizing solicited ETF purchases as unsolicited, failing to report complaints (and then attempting to settle away from the firm), and failing to cooperate with FINRA's investigation.

Jordan's misconduct, according to FINRA, generated $810,000 in commissions for Jordan and WFG Investments, while resulting in $8.4 million in customer losses, and concerned leveraged and/or inverse ETNs and ETFs such as BOIL, DGAZ, GASX, QID, SDS, TBT, TMV, UGAZ, UTWI, and VIXY. The findings also cite unsuitable recommendations in an additional fund (UNG), which is the United States Natural Gas Fund, LP. Many of the unsuitable recommendations were energy (oil and gas) products. Click here for more on the perils of risky and unsuitable energy investments.

FINRA's decision to bar Jordan follows the State of Oklahoma Department of Securities' finding that Jordan "engaged in a flagrant pattern of unethical practices" concerning Jordan's ETF and ETN sales, and his outside business activity "JJ's Rat Pack," an investment related family limited partnership, which is engaged in land and oil asset management. For instance, Jordan purportedly assigned to JJ's Rat Pack the title and interest in JJJ Investment Group and Mooreland to Special Exploration Co., Inc. without disclosing these interests to customers.

The State of Oklahoma's report indicated that Jordan additionally provided customers with a purported "financial statement" that did not reflect accurate account balances (for instance, one customer received a financial statement purporting a balance of $3.7 million when the actual account balance was no more than $1 million—and fell to $652,752 just 15 days later).

FINRA AWC #2015046728802

OKC ODS File #17-010

The findings state that through 2016, while associated with WFG Investments, Jordan (CRD #1776666) unsuitably recommended nontraditional ETFs in 84 of his 153 (or 55% of) assigned customer accounts, resulting in over $8 million in customer losses—in some cases, client accounts lost 70% of their value, even though their account objectives included phrases such as "preservation of capital."

Jordan allegedly recommended his clients purchase more than $22 million in nontraditional ETFs, which were unsuitable for his conservative and moderate risk tolerance customers. In one case, the report states, some of Jordan's elderly clients suffered significant losses after Jordan utilized hundreds of thousands of dollars in margin debt to finance the unsuitable investments.

Jordan purportedly never explained the risks associated with the investments, while improperly using discretion in customer accounts—including trust and IRA accounts—to acquire concentrated positions of the aforementioned TMV, UGAZ, UTWI, and/or VIXY nontraditional ETF products. The report states that Jordan submitted compliance questionnaires in which he falsely responded he was not exercising discretion in these accounts.

The findings state that Jordan also solicited 927 nontraditional ETF and ETN purchases that he improperly mismarked as "unsolicited," while failing to promptly report customer complaints to WFG. Investigators found that Jordan furthermore attempted to settle a customer complaint away from WFG, using a personal e-mail account so as to avoid detection by the firm.

Although Jordan purportedly agreed to settle this complaint away from the firm for $127,000, the findings indicate that Jordan failed to make any of the promised payments to the complaining customer.

Jordan's BrokerCheck report lists a total of 16 disclosures, including a handful of customer disputes alleging unsuitable recommendations, inadequate supervision at WFG, sale of an unapproved real estate investment, failure to follow instructions so as to limit losses, unauthorized trading, and failure to disclose material facts.

WFG discharged Jordan in 2016 for failing to follow firm policies, failing to report a customer complaint, and mischaracterizing an outside business activity.

If you have invested with Jay Dee Jordan of WFG Investments, or with any broker or financial adviser whose unsuitable recommendations and unauthorized transactions of inverse and/or leveraged ETFs, or another complex product not appropriate for your specific investment objectives and risk tolerances, 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.

Related Posts
  • After $13 Million in Penalties for 'Widespread Failure,' Oppenheimer Fined $500,000 for Supervisory and Suitability Gaps Read More
  • FINRA barred former Independent Financial Group (IFG) broker Brett Arthur Hartvigson of San Diego, California for refusing to cooperate with its investigation into allegations that were part of a complaint. In 2021, while associated with IFG, Brett Harvgi Read More
  • Stifel Nicolaus Failed to Detect Unsuitable Recommendations Despite Risk Policy, Says FINRA Read More