The Financial Industry Regulatory Authority censured FSC Securities Corp. and ordered the company to pay a $100,000 fine and $492,485.33 in restitution to affected clients over issues related to supervising leveraged exchange-traded funds.
The regulator found that FSC Securities failed to maintain a supervisory system that would ensure that the company's offering of nontraditional ETFs complied with National Association Of Securities Dealers and FINRA rules.
The company had been allegedly offering the products from January 2009 through November 2009 without implementing a reasonable supervisory system addressing the products. The company stopped selling certain kinds of nontraditional ETFs in December 2009, but it continued offering other kinds of nontraditional ETFs without the required supervisory system. The company also allegedly permitted its registered representatives to make unsuitable recommendations of nontraditional ETFs to customers.
FSC Securities agreed to the sanctions without admitting nor denying the findings.