FINRA Fines Morgan Stanley And Other Brokerages $9.1 Million Over ETF Sales-Reuters


Tuesday, 1 May 2012 02:08pm EDT 

Reuters reported that Citigroup Inc, Morgan Stanley, UBS AG and Wells Fargo & Co on Tuesday agreed to pay more than $9.1 million in fines and restitution for selling leveraged and inverse exchange-traded funds 'without reasonable supervision'. The Financial Industry Regulatory Authority (FINRA) found that, from January 2008 through June 2009, the brokerage firms did not have the supervisory systems in place to properly monitor the sales of leveraged and inverse ETFs and failed to conduct adequate due diligence regarding the risks and features of the ETFs. Settlement agreements the four brokerages signed with FINRA show the extent to which customers invested billions in the risky securities as the market grew. Investors bought and sold about $27.1 billion collectively in the risky ETFs from the four brokerages during period. Citigroup was fined $2 million and ordered to pay $146,431 in restitution. Wells Fargo was fined $2.1 million and ordered to pay $641,489 in restitution. Morgan Stanley was fined $1.75 million and ordered to pay $604,584, and UBS was fined $1.5 million and ordered to pay $431,488. 

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