New Leveraged ETFs Hit The Market — Investors Beware

Leveraged ETFs have recently returned to the news as Direxion announced the release of two new funds. As reported on Marketwatch.com, one of these new funds seeks to obtain returns equal to 300% of the two-year Treasury yield, while the other fund seeks to obtain returns equal to 300% of the inverse return of the two-year Treasury yield (in other words, when the Treasury yield declines, the investor profits).

Despite the repeated warnings issued by FINRA and the SEC as to the tremendous risk presented by leveraged ETFs, it appears that these fund families are forging “full steam ahead.” The announcement from Direxion comes only weeks after its rival, ProShares, released eight additional leveraged ETFs. Four of the new ProShares funds seek to obtain returns equal to 300% of the daily return of the Nasdaq 100, Dow Jones Industrial Average, Standard & Poors 400 Index, and the Russell 2000 Index. The other four funds seek returns equal to 300% of the inverse daily return of these same indices (again, investors in these funds profit when the value of the respective index declines).

Leveraged ETFs invest their shareholders’ money in futures and/or derivatives in order to multiply the daily return of an index. Some leveraged ETFs seek a return that is 200% or even 300% of the daily performance of the index. Inverse ETFs work in much the same way, except that these funds seek a return that is equal to 100%, 200%, or even 300% of the opposite of the daily performance of the index. With these funds, an investor actually profits when the index declines in value. Typical leveraged ETFs and inverse ETFs reset each day and therefore, over periods longer than one day, their performance can vary considerably from the index.

Leveraged ETFs may be appropriate investments for professional asset managers and highly sophisticated investors; however, in this author’s opinion, leveraged ETFs are inappropriate for the vast majority of individual investors. Given the level of volatility in the stock markets in recent times, leveraged ETFs expose investors to tremendous potential for loss in a short period of time. Furthermore, in various instances in the retail setting, leveraged ETFs have been sold to investors without full disclosures related to these risks.

The Kueser Law Firm represents investors who have lost money in leveraged ETFs. If you are concerned that your investments have been mismanaged, contact us to learn more about your rights.

Technorati : , , ,
Del.icio.us : , , ,
Zooomr : , , ,

Share

Subscribe / Share

Article by Jason M. Kueser

Jason M. Kueser has spent his legal career representing individuals, groups, and companies in litigation and arbitration. In addition, he has, and continues to represent clients in class action litigation. Jason is currently admitted to the Missouri Bar, the Kansas Bar, as well as the U.S. District Court for the Western District of Missouri, the U.S. District Court for the District of Kansas, and the Eighth Circuit Court of Appeals. In addition, he is a member of the American Bar Association, the Kansas City Metropolitan Bar Association, and PIABA (Private Investors Arbitration Bar Association). He currently serves on the editorial board of the PIABA Bar Journal. Jason has also written articles that have been published in law reviews, industry legal publications, and newspapers.
Jason M. Kueser tagged this post with: , , , Read 26 articles by

One Comments

Maintained by The Kueser Law Firm

The Kueser Law Firm | Securities Arbitration Attorney | Securities Arbitration Lawyer | Missouri Securities Arbitration Lawyer | Kansas Securities Arbitration Attorney

Social Media – Follow The Kueser Law Firm

DISCLAIMER

The choice of an attorney is an important one and should not be based solely upon advertisements such as this website. Past results afford no guarantee of future results. Every case is different and must be judged on its own merits.

*Any information submitted via this website may not be secure and/or confidential. Merely contacting this firm does not establish an attorney-client relationship.

Contact The Kueser Law Firm

Mailing Address:
P.O. Box 612
Lee's Summit, Missouri 64063
Phone: 816.374.5865
E-mail: Click Here
CONTACT FORM
Your Name (required)

Your Email (required)

Phone Number (optional)

Subject

Your Message:

To eliminate spam, please type the following code in the line below and press the Send button:
captcha

RSS News – Securities Fraud

  • SEC charges third 'mastermind' in ICO fraud case
    The SEC hopes to not only recover any "ill-gotten gains" from Trapani (plus penalties), but to ban him from serving in a company's leadership or participating in any other securities trading. He's facing additional fraud charges from the US Attorney's Office for the Southern District of New York, three of ...
  • The Business Deals That Could Imperil Trump
    One of its principals was a Russian émigré, Felix Sater, linked to organized crime who served time for felony assault and who later pleaded guilty to racketeering involving a $40 million stock fraud scheme. Belgian authorities accused a Kazakh financier recruited by Bayrock of carrying out a $55 million ...
  • Co-Founder of Centra Tech faces criminal charges by the SEC in fraudulent ICO scheme
    The United States Securities and Exchanges Commission [SEC] has announced additional fraud charges against Centra Tech Inc. The SEC has charged the company's co-founder, Raymond Trapani with criminal charges due to the fraudulent scheme related to Centra Tech's $32 million ICO of CTR ...
  • Third Co-Founder Of Centra Tech Charged With $25 Mln Securities Fraud
    The third co-founder of crypto financial services startup Centra Tech Raymond Trapani has been arrested yesterday, April 20, and charged with securities and wire fraud of more than $25 mln associated with the company's Initial Coin Offering (ICO), according to the US Department of Justice's (DOJ) ...
  • Alleged N4.7bn Fraud: EFCC Witness Testifies Against Ladoja
    “We conducted a scientific research on the houses and premises of the portfolio manager and Mcclace Securities and we recovered a paper from Mcclace Securities, showing the distribution of funds to Oyo State; Heritage Apartments owned by Chief Atanda benefitted from the proceeds of shares.
  • Third Cryptocurrency Co-Founder Charged With Scheme to Defraud Investors
    TRAPANI is charged in a four-count criminal complaint with one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison; one count of ...
  • Judge dismisses EB-5 investor lawsuit against state
    Citing the state's absolute immunity from third party civil claims, Carlson ruled against all 16 counts brought by Barr Law Group of Stowe, which represented five investors, including Tony Sutton, a British investor, in the case. The counts included negligence, fraud, willful misconduct, breach of fiduciary ...
  • ACETO INVESTIGATION INITIATED by Former Louisiana Attorney General: Kahn Swick & Foti ...
    KSF, whose partners include the former Louisiana Attorney General Charles C. Foti, Jr., is a law firm focused on securities, antitrust and consumer class actions, along with merger & acquisition and breach of fiduciary litigation against publicly traded companies on behalf of shareholders. The firm has ...
  • Iowa agency to represent victims of alleged investor fraud
    The Iowa State Insurance Commission filed administrative charges alleging Blazefly attracted investors with business practices that are misleading and fraudulent. Christensen says the president of Blazefly would make the rounds of tech conventions and do interviews posted on YouTube and those ...
  • ICO News: Charges mount against Floyd Mayweather-endorsed ICO
    Centra co-founder Ray Trapani has become the third Centra co-founder to be arrested and charged with fraud in connection with a token sale which took ... Trapani got charged with one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, one count of securities ...

RSS SEC – Press Releases

  • SEC Charges Additional Defendant in Fraudulent ICO Scheme
    The Securities and Exchange Commission today announced additional fraud charges stemming from an investigation of Centra Tech Inc.’s $32 million initial coin offering.  In an amended complaint filed today, the SEC charged one of Centra’s co-founders, Raymond Trapani, in a fraudulent scheme related to Centra’s 2017 ICO, in which the company issued “CTR Tokens” to […]
  • Douglas Scheidt, Associate Director and Chief Counsel in the Division of Investment Management, to Leave Agency After 32 Years of Public Service
    The Securities and Exchange Commission announced today that Douglas Scheidt, an Associate Director and the Chief Counsel in the Division of Investment Management, will retire from the SEC at the end of September. Mr. Scheidt has led the Division’s Chief Counsel’s Office for over 21 years.  During his tenure, Mr. Scheidt has provided legal and […]
  • SEC Proposes to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Investment Professionals
    The Securities and Exchange Commission today voted to propose a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers while preserving access to a variety of types of advice relationships and investment products. Under proposed Regulation Best Interest, a broker-dealer would be required to […]
  • Fee Rate Advisory #3 for Fiscal Year 2018
    The Securities and Exchange Commission today announced that starting on May 22, 2018, the fee rates applicable to most securities transactions will be set at $13.00 per million dollars.   Consequently, each SRO will continue to pay the Commission a rate of $23.10 per million for covered sales occurring on charge dates through May 21, […]
  • SEC Unveils Public Service Announcement to Promote Background Checks on Investor.gov
    The Securities and Exchange Commission today unveiled a public service announcement (PSA) to encourage investors to check the background of their investment professional by using the free search tool on Investor.gov before investing.  Investor.gov, the SEC’s website dedicated to individual investors, provides investors with tools and resources to help them invest wisely and avoid fraud.  […]