Securities Arbitration Lawyer Blog
Iorio Altamirano LLP is investigating claims on behalf of Sanctuary Securities, Inc. (formerly David A. Noyes & Company) customers who invested in inverse and leveraged exchanged-traded funds.
On July 1, 2021, Sanctuary Securities, Inc. and the Financial Industry Regulatory Authority (“FINRA”) entered into a Letter of Acceptance, Waiver, and Consent No. 20190606942201 (“AWC”) over allegations that between January 2014 and December 2018, Sanctuary Securities, Inc. failed to establish and maintain a supervisory system reasonably designed to achieve compliance with FINRA Rule 2111 in relation to the solicited sales of inverse and leveraged exchange-traded funds (collectively “Non-Traditional ETFs”) in that the firm’s supervisory system was not sufficiently tailored to address the unique features and risks of these products.
Relatedly, on July 2, 2021, FINRA suspended former Sanctuary Securities, Inc. financial advisor Stuart Pearl from the securities industry for three months. Click on the following link to read more: Stu Pearl, Former David A. Noyes & Company Broker, Suspended for Making Unsuitable Non-Traditional ETF Investment Recommendations – Indianapolis, IN
The FINRA AWC describes Non-Traditional ETFs as follows: “Non-Traditional ETFs are designed to return a multiple of an underlying index or benchmark, the inverse of that benchmark, or both, over only the course of one trading session — usually a single day. Non-Traditional ETFs typically rebalance their portfolios on a daily basis (also known as the daily reset). As a result, due to the effects of compounding of daily returns during the holding period, the performance of Non-Traditional ETFs over periods longer than a single trading session “can differ significantly from the performance … of their underlying index or benchmark during the same period of time.” Because of these risks and the complexity of the products, FINRA has advised its members that Non-Traditional ETFs “are typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.”
According to the AWC, FINRA also alleged the following findings:
- From January 2017 through January 2019, the firm failed to review and evaluate the outside business activities of approximately 15 of its registered representatives, in violation of FINRA Rules 3270.01 and 2010.
- From January through December 2018, the firm distributed sales materials in connection with three private placement offerings that contained prohibited performance projections, in violation of FINRA Rules 2210(d)(1)(F) and 2010.
- From June 2018 through June 2019, the firm failed to file offering documents with FINRA related to eight private placements sold by the firm’s registered representatives, in violation of FINRA Rules 5123 and 2010.
- Between April and August 2019, the firm failed to terminate an offering of securities that did not meet a minimum contingency requirement under the terms of a private placement memorandum and return funds to investors, in contravention of Rule 10b-9 of the Securities Exchange Act of 1934. Therefore, the firm willfully violated Exchange Act Rule 10b-9 and FINRA Rule 2010.
As part of the AWC, Sanctuary Securities, Inc. was censured and agreed to a fine of $160,000. Sanctuary Securities, Inc. also agreed to pay over $370,000 in restitution to customers.
Sanctuary Securities, Inc. became a member of FINRA in December 1939 and was known as David A. Noyes & Company until March 5, 2020. The firm has 35 branch offices and approximately registered representatives.
If you have lost money with Sanctuary Securities, Inc., contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.
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A FINRA restitution order does not preclude investors from pursuing their own claims to seek restitution or other available remedies. Investors harmed by Sanctuary Securities, Inc.’s failures may have a claim against the firm.
If you have lost money with Sanctuary Securities, Inc., contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential consultation.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.