Salas Wang LLC is launching an investigation into Alton Securities Group Inc. for recommending unsuitable investments to clients. A recent FINRA disciplinary action targeted one of Alton's supervisors for failing to properly supervise a registered representative whose conduct harmed clients.
Unsuitable Complex Product Recommendations
"[Alton Securities Group broker] periodically recommended and sold complex products to his customers. For example, at various times during the Relevant Period, [he] recommended and sold leveraged/inverse exchange traded funds and leveraged/inverse mutual funds. In addition, MM recommended and sold a 'steepener note,' designed to increase in value as the gap between short and long-term interest rates increased. MM, however, lacked a reasonable basis to recommend these products to his customers because he did not fully understand the potential risks associated with these securities."
Unsuitable Class A Mutual Fund Purchases
"[Alton Securities Group broker] also recommended and executed 50 unsuitable purchases of Class A shares of leveraged/inverse mutual funds. Because of their fee structure, Class A mutual fund shares are generally preferable to Class B or C shares only when held for several years or longer. [The] customers who purchased the Class A shares, however, typically held them for less than a year, and in some cases, only for several months. As a result, [the broker]'s recommendations of Class A shares of leveraged/inverse mutual funds were unsuitable."
What This Means for Investors
Under FINRA rules, brokers and their firms are required to have a reasonable basis for every investment recommendation. Recommending complex, leveraged, or inverse products without fully understanding their risks — or recommending fee-heavy Class A shares to short-term investors — constitutes a breach of these obligations.
How to Recover Your Losses
If you are an investor who lost money with Alton Securities Group through leveraged ETFs, inverse mutual funds, or unsuitable Class A share purchases, you may be able to recover your losses through FINRA arbitration or securities litigation. Contact Jeff Salas at 312.803.4963 or via the contact form for a free consultation.