Legal Matters

Retirees and other retail investors should exercise caution when considering investments in volatility-linked products. The Cboe Volatility Index (VIX), often referred to as the "fear index," attempts to track future volatility in the stock market based on S&P 500 Index put and call options over a 30-day period. Recently, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice warning member firms about VIX-Index linked products, emphasizing that they are highly likely to lose value over time. Specifically, these products may not be suitable for retail investors, especially those planning to use them as traditional buy-and-hold investments. Several exchange-traded investment products are linked to the VIX Index, including: 1.   iPath S&P 500 VIX Short-Term Futures ETN (VXX) 2.   Proshares Short VIX Short-Term Futures ETF (SVXY) 3.   Proshares Ultra VIX Short-Term Futures ETF (UVXY) 4.   VelocityShares Daily 2x VIX Short-Term ETN (TVIX) 5.   ProShares VIX Short-Term Futures ETF (VIXY) 6.   iPath S&P 500 VIX Mid-Term [...]

David Wayne Krumrey, a former stockbroker registered with Oppenheimer Co. Inc. and based in The Woodlands, Texas, is facing multiple customer-initiated investment-related arbitration claims, with investors seeking significant damages. One such claim, filed on April 1, 2020, alleges that Krumrey breached fiduciary duty in equity transactions conducted in the customer's account between January 1, 2016, and December 31, 2017, resulting in losses on oil and gas securities, including Barclays iPath SRS B S&P Short Term ETN (VXX). According to FINRA Public Disclosure, Krumrey has been involved in five more customer-initiated disputes during his tenure at Oppenheimer, all alleging various forms of misconduct. In one instance, a claim settled on September 18, 2018, resulted in $30,000.00 in damages, with the customer accusing Krumrey of breaching contracts and acting negligently in oil and gas securities transactions, while also pointing out inadequate supervision by the securities broker dealer. Another arbitration claim, settled on January 8, 2019, awarded the customer $240,944.42 in compensatory damages [...]

UBS Financial Services Inc. ("UBS") recently settled charges with the Securities and Exchange Commission ("SEC") concerning its failure to adopt and implement suitable investment policies for volatility-linked exchange-traded products ("ETPs") from January 2016 to January 2018. The SEC found that UBS's discretionary Portfolio Management Program ("PMP") financial advisors purchased and held the iPath S&P 500 VIX Short-Term Futures ETN ("VXX") for advisory clients, which was inconsistent with the product's intended purpose as outlined in offering documents and communicated to UBS by the issuer of VXX. In response to the SEC's findings, UBS agreed to a settlement without admitting any wrongdoing. The terms of the settlement include a censure, disgorgement, and prejudgment interest totaling $112,274, as well as a civil penalty of $8 million. The funds from the penalty will be distributed to investors affected by UBS's actions. SEC Order Details The SEC filed a settled action against UBS on July 19, 2021, citing compliance failures related to the sale of [...]

Investors Face potential losses based on the actions of securities broker David Wayne Krumrey (CRD#: 4121845, The Woodlands, Texas). Krumrey, who was associated with Oppenheimer from 2009 to 2017, has been involved in at least 6 investor disputes, leading to serious repercussions. FINRA (Financial Industry Regulatory Authority) has barred Krumrey from practicing as a securities broker, raising concerns about potential breaches of fiduciary duty and investor damages. Here are the key details: Lawsuit Alleging Negligence and Breach of Fiduciary Duty: In April 2020, Oppenheimer clients initiated a FINRA Arbitration Claim against David Krumrey, asserting that he failed to fulfill his fiduciary duty, neglecting their best interests. The allegations suggest that Krumrey or Oppenheimer negligently advised the clients to invest in stocks and oil and gas securities between 2016 and 2017, including VXX (Barclays iPath Series B SP500 VIX Short-Term Futures ETN). The clients further claimed that Krumrey mismanaged their account, resulting in a demand for $300,000 in compensation. Lawsuit Related [...]