The Financial Industry Regulatory Authority (“FINRA”) barred John Scott Simoncic from the securities industry. Mr. Simoncic had most recently been a broker for Financial West Group. Please call 1-866-817-0201 for a free consultation if you were an investor of Mr. Simoncic.
There are multiple allegations concerning multiple investors against Mr. Simoncic. They include the unauthorized and excessive trading in client accounts. Allegations also include the sale of unsuitable investments. This is the sale investments to an investor that are inconsistent with the risk an investor was willing to assume.
Between August 2014 and March 2016, Simoncic executed 54 of the 97 trades in a single customer account in inverse and/or leveraged Exchange Traded Funds (ETFs), an investment vehicle somewhat similar to a mutual fund. The investor did not have an understanding of the ETFs Simoncic traded in her account; she did not understand how inverse and leveraged ETFs worked, the risks associated with the extended time Simoncic held the ETF positions in her account, or that her account was concentrated in one particular volatility ETF, the ProShares Ultra VIX Short-Term Futures ETF (UVXY), for over nine months.
Such ETFs are especially dangerous. Although leveraged and/or inverse ETFs seek daily investment results, Simoncic held the ETF positions in the investor’s account for multiple trading sessions. For example, Simoncic executed 37 transactions in shares of the ProShares UltraShort S&P 500 (SDS), an inverse double-leveraged ETF, with holding periods generally ranging from four to 97 days. These transactions in the SDS resulted in an overall loss of more than $15,000. Simoncic also concentrated 93 percent of the investor’s portfolio in shares of UVWY, the ProShares Ultra VIX Short-Term Futures—a risky, double-leveraged and speculative ETF—for 295 days, that resulted in losses that exceeded $20,000. Thus, approximately $35,000 of the investor’s total losses of approximately $60,000 related to ETF trading.
Mr. Simoncic has previous regulatory actions and customer complaints that should have alerted his employer. We believe that the former employers of Mr. Simoncic are responsible for investors losses.