The Financial Industry Regulatory Authority (FINRA) has filed a lawsuit against a stockbroker Richard William Lunn Martin, accusing him of using predictions of world economic collapse to sell investments in risky, non-traditional, exchange-traded funds (ETFs) resulting in a loss for his customers of $8 million. Many brokerage firms forbid their brokers from selling leveraged ETFs to retail customers because of the belief that the risky ETFs are unsuitable investments for many investors and because many stockbrokers do not understand the investments.
According to FINRA, Richard William Lunn Martin told clients to hedge their portfolio against an impending worldwide economic downturn by purchasing leveraged, or inverse, ETFs between 2011 and 2014. Martin told his clients to hold these funds until the collapse. Now FINRA is seeking to have Martin repay his investors with interest, along with over $55,000 in fees he received.
FINRA has alleged that Martin, along with his brokerage firm G.F. Investment Services LLC, demonstrated a basic misunderstanding of how non-traditional ETFs work. The prospectuses for the ETFs stated that they should be held for no more than one day, not to be held indefinitely as Martin recommended.
After FINRA initially investigated Martin in 2014, he allegedly attempted to have his supervisor repeat the same story to investigators by rehearsing testimony so their stories aligned.
G.F. Investment Services allowed Martin to resign in July 2015 after receiving a notice that FINRA intended to bring an enforcement action against Martin. Martin also is being investigated for making misleading statements about the possibility of economic collapse in emails sent to investors in 2014.
Have you been misled by G.F. Investment Services?
The attorneys at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.
If you purchased ETFs through Martin or his firm, GF Investment Services LLC, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.
