CUSO Financial Services, L.P. submitted an AWC, which is a regulatory settlement where the defendant neither admits or denies the allegations in a securities matter. in the settlement, CUSO was censured, fined $125,000 and ordered to pay $47,510, which includes
interest, in restitution to customers. Victims should contact an attorney about this and other possible recovery.
The allegations are that a CUSO broker solicited and sold to customers certain unit investment trusts (UITs) that were unsuitable for that investor. This means that they were either too high of a risk investment for the investor or were too complicated for an unsophisticated investor.
The UITs invested in closed-end mutual funds that employed leverage. The findings stated that CUSO, through the registered representative and supevisors who
approved his UIT transactions, failed to have a reasonable basis to recommend and approve
UIT transactions. Neither the broker nor the supervisors who approved the UIT transactions understood the potential risks of the UITs and, in particular, neither understood that the UITs might employ leverage. The use of leverage greatly increases the risk of an investment because leverage means that the fund borrow money for the underlying investment and a decrease in value can lead the lender to accelerate repayment – effectively foreclosing on the fund.
A copy of the regulatory settlement can be found at the following link.