SEC BRINGS ACTION AGAINST ADVISORY FIRM FOR BREACH OF FIDUCIARY DUTIES IN USE OF LEVERAGED ETFs
Taking the Series 66 Exam? Are you familiar with NASAA's Test Specifications for the Series 66 Exam? If yes, then you know that these Test Specifications list topics that will appear on the Series 66 Exam one way or other. Specifically for this blog, I refer to Series 66 Test Specifications Section II(E)(2-3) which refer to Recommendation of Leveraged and Inverse ETFs. Just recently, on May 4, 2023, the SEC issued a Cease-and-Desist Order, File No. 3-21403, dealing with an investment advisory firm, Classic Asset Management LLC (CAM). Why? For Breach of Fiduciary Duty in Connection with Use of Leveraged ETFs. Here's what the SEC said in its Press Release 2023-88 on this matter: According to the SEC’s order, from at least 2017 through December 2020, CAM and Schmitz [an investment adviser representative] invested advisory clients in leveraged ETFs for extended periods of time, often in significant concentrations, despite warnings in the funds’ prospectuses that the products ca...