Finra just smited four broker-dealers for old practices related to inverse and leveraged exchange-traded funds. Yet the regulatory agency also insisted that the behavior being punished has long since changed.

Alex Ulam of IndexUniverse reports that this week Finra ordered Citigroup (whose Smith Barney wirehouse is now part of Morgan Stanley Smith Barney), Morgan Stanley, UBS and Wells Fargo to pony up more than $7.3 million in fines and $1.8 million in restitution over leveraged and inverse ETF sales in 2008 and 2009. A Finra official insisted that the industry has since cleaned up its act.

"We know that we chose the right time period because in June 2009 we put out notice to members," the official told IndexUniverse. "From that day on, the firms changed their practices and changed who they were selling it to and put in more modifications to their programs, so any harm would have taken place before 2009. 

Edited by: Neil Anderson, Managing Editor


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE