Leveraged ETF Lawsuits: Recover Your Leveraged ETF Investment Losses

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Leveraged ETF Lawsuit

Leveraged ETF Fund Lawsuits and FINRA Claims

Leveraged ETF Fund Lawsuits and FINRA Claims

The Investment Fraud and Securities Fraud Lawyers at Gilman Law LLP are offering Free Legal Consultations to investors who suffered substantial financial losses in Leveraged ETFs (Leveraged Exchange Traded Funds). Several Leveraged ETF Funds being investigated by our Investment Losses Law Firm are listed below:


  • Direxion Funds
  • ProShares, and
  • Rydex.


Our firm is acting as co-lead counsel on the Direxion Funds Class Action Lawsuit as well as the ProShares Class Action Lawsuit. In many cases, brokers lacked a comprehensive understanding of Leveraged ETFs, and held them as long positions. When market volatility caused high-risk leveraged ETFs, such as triple-leveraged ETFs, to implode, investors suffered millions in leveraged ETF losses. In 2012, several major brokerages were hit with large FINRA fines for sales practices related to Leveraged ETFs. Some of the major brokers include the following:

  • Citigroup Inc. (C);
  • Morgan Stanley;
  • UBS AG (UBSN); and
  • Wells Fargo & Co. (WFC).

For over 40 years, our Investment Losses Law Firm has represented investors in all major aspects of securities litigation, including stock manipulation, securities fraud, and shareholder rights violations. If you were among the ETF investors who suffered serious financial losses in leveraged ETFs, you may be able to pursue a class action lawsuit against the Leveraged ETF or a FINRA arbitration claim against the brokerage firms that sold these complex and overly-risky financial products. Our securities fraud lawyers are investigating Leveraged ETF sales, and are offering a free legal consultation to investors wishing to pursue a Leveraged ETF lawsuit. To discuss your leveraged ETF claim, and to learn more about filing a FINRA claim for ETF losses, we urge you to contact our securities fraud lawyers today.

What are Leveraged EFT Funds?

Legal Help for Leveraged ETF Fund Losses

Legal Help for Leveraged ETF Fund Losses

Leveraged ETF Funds are unique, non-traditional ETFS that, like stocks, typically trade throughout the day on securities exchanges. These complex investments utilize financial derivatives and debt to amplify the returns of an underlying index. Leveraged ETF Funds usually combine investors’ money with borrowed funds to purchases options and other derivatives. Leveraged ETFs often promise high returns, but this combination of high leverage and use of derivatives means that Leveraged ETFs carry a significant amount of risk. As such, Leveraged ETFs are usually not suitable for retail investors.

Leveraged ETFs are designed as short-term investments. In 2009, FINRA released Regulatory Notice 09-31 outlining brokerage firms’ obligations relating to high-risk ETFs, including Leveraged ETFs:

“Most leveraged and inverse ETFs ‘reset’ daily, meaning that they are designed to achieve their stated objectives on a daily basis. Due to the effect of compounding, their performance over longer periods of time can differ significantly from the performance (or inverse of the performance) of their underlying index or benchmark during the same period of time.”

In the wake of FINRA’s warning, some brokers, including Edward D. Jones, UBS and Ameriprise, stopped selling leveraged funds. Other brokerages, including Charles Schwab, Raymond James Financial and LPL Financial, announced reviews of their policies concerning Leveraged ETF Funds, with some firms posting information on their respective Web sites that non-tradtional ETFs, including Leveraged ETFs “are not right for everyone.” In October 2009, ProFunds Group, one of the largest issuers of Leveraged ETFs, issued a warning that some of its leveraged funds may not be suitable for all investors.

Leveraged ETF Funds Complaints

Unfortunately, many brokers misunderstood the makeup of these leveraged funds and held them as long positions. Non-traditional ETFs, including Leveraged ETFs, suffered dramatic losses following the market volatility of 2008 and 2009. Investors, who had been enticed to purchases these risky investments with promises of big returns, instead sustained millions in Leveraged ETF losses.

In May 2012, the following four big brokerage firms reached an agreement with FINRA to pay a combined $9.1 million for failing to adequately supervise ETF sales in 2008 and 2009:


  • Citigroup Inc.
  • Morgan Stanley
  • UBS AG and
  • Wells Fargo & Co.


The total included fines of about $7.3 million and $1.8 million in reimbursement to customers. FINRA said each of the four firms sold “billions of dollars of these ETFs to customers, some of whom held them for extended periods when the markets were volatile.”

Legal Help with Leveraged ETF FINRA Claims and Leveraged ETF Lawsuits

Investors who purchased Leveraged ETFs may be eligible to file a FINRA claim for EFT losses. Gilman Law has extensive experience representing both individual and institutional investors in securities class action suits, and has recovered over a billion dollars for its clients. Our securities fraud lawyers are ready to assist investors who want to pursue Leveraged ETF lawsuits. For a free evaluation of your Leveraged ETF complaint, please fill out the form on the left or CALL TOLL FREE (888) 252-0048.