Four major players will be paying fines totalling $9.1 million to U.S. self-regulator FINRA over use of inverse, leveraged, and other unusual ETFs and related products.
FINRA, which oversees brokers that transact business on the Nasdaq and New York Stock Exchange, announced it levied fines against CitiGroup, Morgan Stanley, UBS, and Wells Fargo based on guidance issued to its members in June 2009 on how Non-Traditional ETFs should be used in client portfolios. Fines for each were in the $2 million range.
Concerns stem particularly from the use of leveraged ETFs, which are designed to deliver superior performance to the indexes they track. Other so-called non-traditional ETFs are inverse or short funds designed to deliver performance that is contrary to the tracked index.