FINRA barred Wedbush Securities broker William Henry Sandeman for recommending volatility-linked and non-traditional exchange traded products to customers in violation of Regulation Best Interest. Specifically, investigators wrote that Sandeman's recommendations that customers purchase and hold the Volatility Index (VIX) futures as a long-term investment strategy ran afoul of the volatility-linked products' own warnings that buy-and-hold strategies may be unsuitable and costly for investors.
BrokerCheck indicates that Sandeman was registered with Wedbush Securities' Seattle, Washington office. Wedbush is based on Pasadena, California.
According to the report, William Sandeman (CRD #831384) violated the Security Exchange Act's Regulation Best Interest by recommending volatility-linked exchange traded products (ETPs) that were not in his customers' best interests. For instance, whereas FINRA previously warned brokers that "volatility-linked ETPs may be unsuitable for certain retail investors, particularly those who plan to use them as traditional buy-and-hold investments," Sandeman purportedly recommended customers buy-and-hold them anyway.
One such volatility-linked ETP prospectus was even more explicit: "[i]f you hold your [ETPs] as a long term investment, it is likely that you will lose all or a substantial portion of your investment."
Yet Sandeman still recommended these products to more than 50 elderly investors, the majority of whom had conservative or moderate risk tolerances and for whom such an aggressive and risky investment was not suitable. FINRA alleged that, thus far, Sandeman's customers have lost approximately $3.5 million.
Sandeman's BrokerCheck account lists four settled customer disputes over the years, including allegations of excessive trading without authorization in high risk stocks, risky investment recommendations, and losses in complex products such as exchange-traded fund (ETF) and exchange-traded note (ETN) holdings.
If you invested with Wedbush Securities broker William Sandeman in Seattle, or with any representative or investment adviser nationwide who recommended unsuitable buy-and-hold strategies for complex products, such as volatility-linked ETPs, that have resulted in losses or other damages, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.