The Financial Industry Regulatory Authority today revealed new sanctions against Citigroup Global Markets, Inc; Morgan Stanley & Co., LLC; UBS Financial Services; and Wells Fargo Advisors, LLC totaling more than $9.1 million for selling leveraged and inverse exchange-traded funds “without reasonable supervision and for not having a reasonable basis for recommending the securities.”

According to FINRA, from January 2008 through June 2009, the firms did not have adequate supervisory systems in place to monitor the sale of leveraged and inverse ETFs, and failed to conduct adequate due diligence regarding the risks and features of the ETFs. As a result, the firms did not have a reasonable basis to recommend the ETFs to their retail customers.

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