In February 2022, Massachusetts securities regulators filed an administrative complaint against Purshe Kaplan Sterling Investments and seeks to require the firm to pay $2.3 million in restitution for ignoring, for many years, the sale of risky, complex exchange traded funds (ETFs) and failing to supervise dually registered broker-dealer agents at the Harvest Group Wealth Management, LLC who engaged in outside business activities. Harvest Group Wealth Management, LLC is a wealth management firm.
According to the complaint, while the transactions were conducted outside of the agents’ employment with Purshe Kaplan Sterling Investments, the brokerage firm had a duty to review the transactions as part of their supervisory responsibilities, and they failed to review the suitability of thousands of leveraged ETF transactions in the accounts of Massachusetts investors.
According to the complaint, investors suffered $2.3 million in losses as a result of unsuitable investments in leveraged ETFs that are highly complex investments that should be monitored on a daily basis and should not hold for more than a day. The investigation found that the Harvest Group Wealth Management, LLC invested more than 340 client accounts in leveraged ETFs for up to a year, causing them to experience significant losses.
Public records indicate that Purshe Kaplan Sterling Investments amended its policies in 2019 to conduct risk-based reviews of dually registered advisers’ outside transactions; however, the company still failed to conduct any reviews in 2019, and only conducted one transaction review in 2020.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Purshe Kaplan Sterling Investments may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.