- Cambridge Investment Research fined for redemption of VA, leveraged ETFs.
- Customers redeemed VAs, and moved their proceeds to an advisory account.
- Employees were involved with, and recommended some of the transactions.
- No systematic supervision or record of redemption or procedures for doing.
- Firm did not find out which of the transactions were recommended by their
associated persons and were thus subject to FINRA suitability requirements.
- Non-traditional ETFs traded by the representatives, in retail client accounts.
- 84 registered representatives, executed 4,773 transactions, totaling $127m.
- Procedures required registered representatives who wanted to trade ETFs to
attend training, and sign leveraged/inverse ETF rep/advisor attestation form.
- Form required representatives to represent before executing ETF transaction.
- Firm failed to enforce WSPs regarding non-traditional ETFs in certain respects.
- Allowed reps to execute non-traditional ETF trades before signing attestation.
- All 84 representatives who executed non-traditional ETF transactions for firm,
executed at least one such transaction before signing-off the attestation form.
- Firm allowed customers to buy non-traditional ETFs before giving disclosures.
- Did not establish an supervisory system to effectively monitor holding period.
- Procedures required compliance to review customer account and identify any
accounts that held these position for over 10 days and if necessary follow up
- Firm failed to enforce, customers held such ETF positions for lengthy periods.
- Numerous non-traditional ETF positions, sold by customers, held over 7 days.