The orders further find that the firms failed to adopt or implement policies and procedures regarding suitability and volatility-linked exchange-traded products. The five actions concern sales of volatility-linked exchange-traded products. As set forth in the orders, the value of the products attempted to track short-term volatility expectations in the market, typically measured against derivatives of the CBOE volatility index. According to the orders, the offering documents for the products made clear that the short-term nature of these products made investments in the products more likely to experience a decline in value when held over a longer period. The orders find that, contrary to these warnings, and without understanding the products, representatives of the firms recommended their customers and clients buy and hold the products for longer periods, including in some circumstances, for months and years. – will result in the return of over $3 million to harmed investors. Edwards & Company Inc., Royal Alliance Associates Inc., Securities America Advisors Inc., and Summit Financial Group Inc. The five actions filed today – against American Portfolios Financial Services/American Portfolios Advisors Inc., Benjamin F. The Securities and Exchange Commission today filed settled actions against three investment advisory firms and two dually-registered broker-dealer and advisory firms for violations that related to unsuitable sales of complex exchange-traded products to retail investors. The sales occurred between January 2016 and April 2020. These actions are the first arising from investigations generated by the Division of Enforcement's Exchange-Traded Products Initiative, which utilized trading data analytics to uncover potential unsuitable sales.
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