Securities Lawyers Blog
Paul Renard (Renard) a broker with SII Investments, Inc. (SII) was recently suspended for two years and fined $60,000 by The Financial Industry Regulatory Authority (FINRA) over allegations that Renard: (1) recommended that at least four customers buy and hold nontraditional ETFs without having reasonable grounds for believing that the recommended investments were suitable for those customers; (2) distributed at least nine independently prepared reprints to customers without Ameriprise’s review and approval; (3) used a personal email account, which Ameriprise did not monitor, to distribute the materials; and (4) failed to disclose two tax liens filed against him by the State of Wisconsin. In addition, at least 21 customer complaints have been filed against Renard.
Renard was previously a registered representative of Ameriprise Financial Services, Inc (Ameriprise) from August 21, 2009, until June 22, 2011, when Ameriprise terminated his registration alleging that Renard failed to comply with company policies by soliciting prohibited securities, use of external email account, and failed to properly update his disclosures. Prior to Ameriprise Renard was registered with Securities America, Inc. from November 2009 through May 2011. Renard’s BrokerCheck discloses that he is also the president of First Tee of Green Bay, a managing director of Reedsville Granary LLC, and employed with PDI Financial.
FINRA alleged that Ameriprise implemented a policy prohibiting its representatives from recommending or soliciting nontraditional ETFs. Under the policy, customers could hold existing nontraditional ETF positions but any new purchases could only occur on an unsolicited basis. On September 2, 2009, Renard entered a solicited buy order for an inverse ETF in a customer’s account. Ameriprise’s compliance department informed Renard that Ameriprise did not allow its representatives to solicit nontraditional ETF purchases. Nonetheless, according to FINRA, Renard continued to solicit customers to purchase nontraditional ETFs.
When placing the trades, Renard allegedly falsely marked the trades as unsolicited. FINRA found that between September 2009, and June 2011, Renard improperly marked at least 330 nontraditional ETF transactions as unsolicited and received more than $53,000 in commissions on these transactions. FINRA also found that the complexity and high-risk nature of nontraditional ETFs, the investments are typically unsuitable for retail investors. Nontraditional ETFs are generally used for short term trading and reset daily. This means that nontraditional ETFs are designed to achieve their stated objectives on a daily basis. Their performance over long periods of time can differ significantly from the performance of their underlying index or benchmark.
Yet, even though Renard’s customers were predominantly individual investors with modest investment objectives and minimal tolerance for risk, FINRA alleged that Renard recommended nontraditional ETFs to his customers. In addition, FINRA found that when one of Renard’s customers complained about the recommended inverse-leveraged ETFs, Renard asked the customer to send further emails to Renard’s external email address. FINRA found that Renard used this external email to correspond with several customers concerning securities in their accounts. FINRA found that the use of external emails to correspond concerning securities related business was a violation of the FINRA rules.
The attorneys at Gana Weinstein LLP are experienced in investigating claims concerning the sale of unsuitable investments including nontraditional ETFs. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.