Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned broker Cary Olson (Olson) concerning allegations that Olson made recommendations in non-traditional exchange-traded funds (ETFs) to several customers without having reasonable grounds to believe his recommendations were suitable in relation to the holding periods for the ETFs. FINRA also alleged that Olson permitted the execution of options transactions in the account of a customer who was not approved for options activity.
Olson entered the securities industry in 1993. In June 2006, Olson became registered at FlNRA firm Great Circle Financial until July 2013. From June 2013 until November 2013, Olson was registered with GBS Financial Corp. Finally, Olson is currently associated with Calton & Associates. This disciplinary matter is not the first time FINRA has sanctioned Olson. In January 2006, Olson consented to the entry of findings by NASD that he exercised discretion in customer accounts without obtaining written authorization. Olson was suspended for one month and fined $5,000.
FINRA alleged that from October 2010 through October 2012, Olson recommended transactions of various leveraged and inverse-leveraged ETFs in the accounts of five customers. As a background, these types of ETFs are designed to achieve their objectives over the course of a single day only and are generally not appropriate for long term holdings. By holding these ETFs over longer periods of time the value of the investment differs dramatically from the index it tracks because the investment is reset daily.
Despite these risks, FINRA found that the ETFs Olson recommended to his customers were held for much longer periods and up to 668 days with an average holding period of 290 days. FINRA found that these extended holding periods showed that Olson failed to appreciate the nature of the ETFs at the time of his recommendations and mostly likely did not understand that they were not designed to achieve their objectives for extended holding periods. Accordingly, FINRA found that Olson did not have reasonable grounds to believe his recommendations were suitable.
In addition, FINRA alleged that Olson was the only appropriately registered principal responsible for reviewing and approving options transactions. From January 2011 through May 2012, FINRA found that Olson reviewed and approved 42 purchases and sales of options contracts effected by a broker in the account of customer. However, the customer’s account was never approved for options transactions.
Investors who have suffered losses through unsuitable investment recommendations may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of where brokerage firms failure to supervise their representatives sale of inappropriate investments. Our consultations are free of charge and the firm is only compensated if you recover.