William Galvin, Massachusetts' top securities regulator, charged Purshe Kaplan Sterling Investments on Thursday for failing to supervise its dually registered broker-dealer agents' outside business activities and their sales of leveraged ETFs.
According to an administrative complaint filed today by Galvin's Securities Division, "PKS has for years failed to review transactions effected by agents whom the broker-dealer has allowed to act as dually-registered investment adviser representatives of the Harvest Group Wealth Management."
While these transactions were conducted outside of the agents' employment with PKS, "the employer had a duty to review these transactions as part of their supervisory responsibilities," Galvin said.
Because of PKS' failure to supervise agents' outside business activities with the Harvest Group, Massachusetts investors have lost more than $2.3 million, according to Galvin's office.
The losses were incurred as a direct result of unsuitable investments in leveraged exchange-traded funds, which are highly complex investments that should be monitored on a daily basis.
