Posted: July 11th, 2017
Our attorneys are investigating financial advisor Cory R. Burnell (CRD# 3260340), previously of LPL Financial LLC (CRD# 6413), for unsuitable recommendations to invest in inverse leveraged exchange-traded funds (ETFs).
Cory Burnell has 8 customer complaints on his FINRA BrokerCheck report, all of which concern Burnell’s unsuitable recommendations to invest in inverse leveraged ETFs. These complaints allege damages totaling over $1.9 million. All of the customer complaints have been filed within the past two years.
FINRA requires brokerage firms to supervise their brokers’ activities during the time the brokers are registered with them. According to Burnell’s BrokerCheck report, Burnell is no longer registered with FINRA.
According to Burnell’s detailed CRD report, Burnell operates his own business, Blue Print Asset Management, Inc. Blue Print Asset Management, according to its website, is an investment management service that also provides tax planning to its clients.
What is an Inverse ETF?
An inverse ETF needs to buy when the market rises and sell when it falls to maintain a fixed leverage ratio. This results in a volatility loss proportional to the market variance. Compared to a short position with identical initial exposure, the inverse ETF will therefore usually deliver inferior returns. The exception is if the market declines significantly on low volatility so that the capital gain outweighs the volatility loss. Such large declines benefit the inverse ETF because the relative exposure of the short position drops as the market fall.
Since the risk of the inverse ETF and a fixed short position will differ greatly as the index drifts away from its initial daily value, differences in realized payoff may have no clear interpretation. It may, therefore, be better to evaluate the performance assuming the index returns to the initial level. In that case, an inverse ETF will always incur a volatility loss relative to the short position.
Inverse ETFs take advantage of risky investment techniques like short selling, so they are often an unsuitable investment for retail investors. As such, they should only be used by experienced professional traders highly familiar with their complexities. Also, inverse ETFs should ideally only be held for a maximum of one trading period (one day), as they profit from a decline in the value of the underlying benchmark of the stock exchange.
Contact Our Firm if You’ve Lost Money
Some of the clients who lost money because of Burnell’s alleged actions were able to regain a significant settlement. If you were one of his clients and you lost money investing with Burnell, you may be able to recover lost funds through FINRA arbitration. To learn how the process works, contact the Silver Law Group for a free consultation.
The attorneys at the Silver Law Group are leaders in the field of securities arbitration. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisors. Scott Silver is currently the chairman of the American Trial Lawyers Association, Securities, and Financial Fraud Group and routinely represents investors in securities arbitration claims.
Call us at 800-975-4345 or fill out our online form. We work on contingency basis, so there is no fee unless you recover money.
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