In February 2022, the Commonwealth of Massachusetts filed an Administrative Complaint against Purshe Kaplan Sterling for its failure to supervise its brokers who simultaneously served as Harvest Group investment representatives that sold leveraged ETFs as long-term investments despite the products’ prospectuses and disclaimers warning of risk and unsuitability for use as a long-term holding option. Read more below for KlaymanToskes’s Harvest Group Proshares Purshe Kaplan Sterling ETF Investigation.
Exchange-traded funds are investment vehicles that track an index, a commodity, or a basket of assets such as an index fund. Leveraged ETFs, on the other hand, ETFs that utilize borrowed funds in order to seek to return, on a daily or monthly basis, 200% or 300% of the daily or monthly returns of an underlying index or benchmark. The leveraged nature of the ETF makes these investment vehicles highly complex financial instruments.
No. According to Commonwealth of Massachusetts’ Complaint and FINRA, leveraged ETFs are typically unsuitable for average investors who plan to hold them longer than one day.
For instance, in June 2009, FINRA issued a Notice cautioning forms regarding the complexity of leveraged ETFs. The Notice reminded firms of their supervisory responsibilities regarding broker-dealer agents’ recommendations to buy or sell leveraged ETFs.
What is a Leveraged ETF, and Why is it Risky?
According to the Commonwealth of Massachusetts, Purshe Kaplan Sterling failed to review the suitability of thousands of leveraged ETF transactions executed by dually registered individuals of Purshe Kaplan and Harvest Group Wealth Management, LLC.
In fact, at no point in time from 2017 through 2019 did the firm review these private securities transactions of its dually registered representatives at the Harvest Group.
Purshe Kaplan Sterling’s failure to supervise allegedly caused millions in investor losses.
At least 347 Massachusetts client accounts at the Harvest Group invested in and held QLD for longer than a day. Of those 347 accounts, 300 of them experienced losses.
Further, at least 341 Massachusetts accounts at the Harvest Group invested in and held SSO for longer than a day. Of those 341 accounts, 324 of them experienced losses.
Purshe Kaplan Sterling failed to review or flag any of these transactions, resulting in Massachusetts investors losing more than $2.3 million.
The Harvest Group is an investment advisory firm based in Waltham, Massachusetts. It was founded in 2016. The firm provides discretionary investment management services and makes available financial planning and consulting services to individuals and their trusts and estates. As of December 31, 2021, The Harvest Group managed $244,009,538 of assets on a discretionary basis.
The Harvest Group supervises individuals who are registered representatives of Purshe Kaplan Sterling. Those individuals provide clients with securities brokerage services under a commission-based arrangement. Per a March 2022 Form ADV for The Harvest Group, the firm has 5 registered representatives of a broker-dealer.
Former and current customers of The Harvest Group and Purshe Kaplan Sterling who were recommended to invest in Proshares Ultra QQQ and Proshares Ultra S&P 500 ETFs with losses in excess of $250,000, and those who have information relating to the manner in which the firms handled customer accounts, are encouraged to contact Lawrence L. Klayman, Esq., at 1-888-997-9956, and download our Special Investor Report.
KlaymanToskes is a leading national securities law firm practicing exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $230 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com