The law firm of Oakes & Fosher is currently investigating the alleged negligence and/or misconduct by former securities broker Dominic Tropiano. According to his publicly available FINRA BrokerCheck report, Dominic Tropiano received multiple customer complaints over the course of his career. Most of these complaints were in connection with what are known as leveraged ETFs.

Dominic Tropiano was an Ohio based securities broker. He worked in the securities industry for ten years. During his career, he was registered with four different securities firms. He is no longer working as a registered securities broker in any fashion.

His Registrations

  • McDonald Investments (2004-2005)
  • NatCity Investments (2006-2008)
  • Key Investment Services (2008-2015)
  • America Northcoast Securities (2016)

The Allegations

  • In August 2016, customers alleged that Dominic Tropiano violated the Ohio Securities Act and FINRA rules, handled their account negligently, executed unauthorized trades, breached contract, and breached his fiduciary duty all in connection with leveraged ETFs. This case is currently pending. The customers are seeking $400,000 in damages.
  • Also in August 2016, customers alleged that Dominic Tropiano managed their account negligently, violated FINRA rules, breached his fiduciary duty, recommended unsuitable investments, and executed unauthorized trades in connection with leveraged ETFs. This case is currently pending. The customers are seeking $330,000 in damages.
  • Also in August 2016, customers alleged that Dominic Tropiano managed their account negligently, recommended unsuitable investments, executed unauthorized trades, breached his fiduciary duty, breached contract, and committed fraud in connection with leveraged ETFs. This case is currently pending. The customers are seeking $800,000 in damages.
  • In November 2016, a customer alleged that Dominic Tropiano recommended unsuitable mutual funds. This case was settled for $85,000 in damages.
  • In January 2017, customers alleged that Dominic Tropiano violated FINRA rules and recommendations, negligently handled their account, recommended unsuitable securities, and executed unauthorized trades. This case is currently pending. The customers are seeking $100,000 in damages.
  • In April 2017, customers alleged that Dominic Tropiano violated the Ohio Securities Act and FINRA rules, managed their account negligently, recommended unsuitable investments, executed unauthorized trades, breached his fiduciary duty, and breached contract in connection with leveraged ETFs. This case is currently pending. The customers are seeking $150,000 in damages.
  • In May 2017, customers alleged that Dominic Tropiano managed their account negligently, violated FINRA rules, breached his fiduciary duty, recommended unsuitable investments, and executed unauthorized trades. This case is currently pending. The customers are seeking $250,000 in damages.
  • Dominic Tropiano was eventually sanctioned by FINRA in May 2019 for his alleged consistent trading of leveraged ETFs. FINRA determined that Tropiano executed these trades without having a reasonable basis to believe that these products would be suitable for his customers. Due to these alleged actions, he was barred by FINRA from acting as a securities broker in any fashion.

What Are Leveraged ETFs?

An ETF, or exchange traded fund, is a product that holds the same securities as a particular index. If the value of the followed index changes, the ETF will usually adjust identically. A leveraged ETF, on the other hand, operates differently. A leveraged ETF creates debt to purchase derivatives such as options and futures to multiply gain. As opposed to the identical adjustment of an ETF, a leveraged ETF might receive a 2 or 3 percent gain for every 1 percent gain the index experiences.

A leveraged ETF can also work to the customer’s dismay should the index go down. Just like the customer receives multiplied gains should the index increase, they can experience multiplied losses should the index decrease. This is because leveraged ETFs use borrowed funds to purchase options and futures.

Leveraged ETFs are designed for short-term trading strategies. They are actually meant to be purchased and then resold in a single trading day for a quick return. If an investor holds onto a leveraged ETF longer than is necessary, they may end up losing money even if the index it was tracking has increased. This is because leverage is reset on a daily basis. Essentially, the losses the customers’ experience on a given trading day do not go away because the product returns to its original value at a later date.

Due to the substantial risks associated with the products, leveraged ETFs are highly unsuitable for investors looking for low risk investments. Despite this, many less than scrupulous securities brokers continue to recommend these products to investors with modest investment objectives. Not only this, but many securities brokers that recommend leveraged ETFs advise their customers against selling by the product’s maturity date because they think the product can turn around if held onto longer.

Oakes & Fosher Can Help

Many investors are still unaware of the legal recourse available to them after losing money due to securities broker negligence and/or misconduct. The truth is that investors who have lost money in this fashion may actually be entitled to damages. Oakes & Fosher dedicates its entire legal practice to helping investors who have lost money in this manner. If you, or someone you know, have lost money investing with Dominic Tropiano, please contact Oakes & Fosher for a free and private consultation. Oakes & Fosher handles cases on a contingency basis, which means there are no fees charged unless we collect for you.