The SEC accused former broker Demitrios Hallas with trading leveraged Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) in clients’ accounts and swindling $170,000 from one of his clients. The Commission claims he trade one hundred seventy-nine daily leveraged ETFs and ETNs in client accounts from September 2014 to October 2015, creating $128,000 in fees and commissions. At the same time, his clients lost around $150,000. It also states that he used the swindled cash to pay for rent, restaurant tabs, credit card bills, and student loan payments.
The complaint alleges that Hallas systematically disregarded his client’s objectives and continued to trade in high risk investments that were not consistent with their goals or risk tolerances. The complaint also states that the customers were unsophisticated, having little to no investing experience and modest assets. One such client entrusted Demitrios Hallas with his retirement from working as a baker, taxi driver and garbage truck driver. A second was a retired HR officer for a religious organization. Another was a boiler technician. A fourth was an interpreter, and a fifth was a retired college administrative assistant.
For reference, the majority of highly leveraged ETFs and ETNs are not suitable for unsophisticated investors. It is also believed to be unwise to hold them for longer than a couple days. The SEC complains that Hallas had two such positions for over five months.
The SEC’s complaint alleges that Hallas violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The complaint seeks a permanent injunction as well as the return of ill-gotten gains plus interest and penalties.When brokers sell unsuitable investments, it can cause substantial losses for the investor. The Frankowski Firm has years of experience representing investors who have lost money as the result of brokers’ malfeasance. If you or someone you know has lost money as a result of such a scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.