Broker Lyle Boudreaux allegedly traded leveraged ETFs resulting in significant financial losses.
According to a consent order, signed on November 18, 2020, the Texas State Securities Board has reportedly denied registration for former Independent Financial Group advisor Lyle Boudreaux (CRD#: 4303420, Houston, Texas) after he allegedly traded leveraged ETFs in certain client accounts which resulted in significant financial losses.
From February 2016 through April 2017 Boudreaux reportedly provided investment advisory services to at least 18 client accounts that he allegedly managed with discretion, according to the consent order. Boudreaux’s account management purportedly included buying and selling shares of Proshares Ultra VIX Short-Term Futures ETF (“UVXY”), a leveraged ETF.
Leveraged ETFs are securities that use financial derivatives and debt to amplify the returns of an underlying index. Leveraged ETFs are typically used to speculate on an index, or to take advantage of the index’s short-term momentum. Due to the high-risk, high-cost structure of leveraged ETFs, they are rarely used as long-term investments. Generally, shares in leveraged ETFs are held for a few days or less, and may not be in the best interest of a client absent an identified, short-term and specific trading objective.
Boudreaux’s clients reportedly suffered significant losses after he allegedly purchased and held shares in UVXY to levels that exceeded the risk tolerances these clients were willing to endure.
According to his FINRA BrokerCheck report, Boudreaux was reportedly registered with Independent Financial Group Financial in Houston, Texas from 2012 until January 2020. He reportedly has 6 disclosure events on his broker report including 5 customer complaints and 1 employment separation in 2012. All five complaints alleged considerable losses sustained as a result of unsuitable ETF trading, according to the consent order.
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Brokerage firms are required to adequately supervise their advisors. They must ensure they are complying with FINRA rules.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.
If you are concerned about investments with Lyle Boudreaux and Independent Financial Group, the securities attorneys at The White Law Group may be able to help you. For a free consultation with an attorney, please call (888) 637-5510.
The foregoing information, which is all publicly available, is being provided by The White Law Group.
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