The law firm of Oakes & Fosher is presently investigating the alleged misconduct of former securities broker James Dresselaers. According to his publicly available FINRA BrokerCheck report, James Dresselaers has been the subject of multiple customer disputes over the course of his career.
James Dresselaers was a Maryland based securities broker. He worked in the securities industry for thirty-four years. During his career, he was registered with seven different securities firms. He is no longer working as a registered securities broker in any fashion.
His Registrations
- Buttonwood Securities Corporation (1983)
- Buttonwood Securities Corporation of Massachusetts (1984-1988)
- J.T. Moran & Co. (1988-1989)
- Polaris Financial Services (1989-2000)
- Jefferson Pilot Securities Corporation (2000-2003)
- Gem Financial Associates (2006-2009)
- H. Beck (2003-2017)
The Allegations
- In December 2015, a customer alleged that James Dresselaers recommended highly unsuitable Exchange Traded Funds and equity securities. The customer alleged that Dresselaers failed to disclose the associated risks. This case was settled for $1.5 million in damages.
- In September 2017, James Dresselaers was officially sanctioned by FINRA. The findings in this matter state that Dresselaers recommended non-traditional ETFs and privately traded equities from the mining and precious metals sector to a member firm customer. According to FINRA, these recommendations were highly unsuitable for an investor with very little investment experience and a moderate risk tolerance. These alleged recommendations caused the customer to lose a total of 1.1 million. Due to these allegations, James Dresselaers was fined $10,000, forced to pay $18,708 in disgorgement, and was suspended from acting as a securities broker in any fashion for a period of 60 days.
- In February 2018, another customer alleged that James Dresselaers recommended highly unsuitable ETFs and private equity securities and failed to disclose the associated risks. This case was settled for $1.25 million in damages.
- In March 2018, a customer alleged that James Dresselaers recommended unsuitable ETFs and Closed-End Mutual Funds. This case was settled for $500,000 in damages.
- Also in March 2018, a customer alleged that James Dresselaers recommended unsuitable non-traditional ETFs, Private Placements, and other types of private equity securities. This case was settled for $2 million in damages.
- Also in March 2018, yet another customer alleged that James Dresselaers recommended they purchase highly unsuitable non-traditional Exchange Traded Funds. This case was settled for $285,000 in damages.
Non-Traditional Exchange Traded Funds
An Exchange Traded Fund, or ETF, is a security that mirrors the performance of a particular market index. The success of the ETF directly mirrors the success of the index in a 1 to 1 ratio. Non-traditional ETFs use complicated investment strategies to see returns in different ways, or to amplify returns. For instance, a product known as an Inverse ETF provides investors with the opposite of whatever the mirroring index has moved to. These products are purchased by customers who believe the mirroring index’s value will fall instead of rise.
Then there is a highly volatile product known as a Leveraged ETF. These products utilize complicated financial derivatives, such as options and futures, in order to amplify returns. These derivatives allow returns for leveraged ETFs to be higher than what the mirroring index has risen to. While regular ETF values mirror the index in 1:1 ratio, leveraged ETFs might be a 2:1, or even a 3:1 ratio.
Brokers who recommend leveraged ETFs to their customers love to use the amplified returns as the main selling point, while often omitting the significant risks associated with these products. While returns for a leveraged ETF are amplified, so are the customer’s losses. If the value of the index falls, then the customer’s losses are multiplied in the same way that their gains would have been had the value of the index risen. This can leave these investors on the hook for significant amounts of money disproportionate to the amount they originally invested.
Another significant risk associated with leveraged ETFs is how much harm they can cause to investors who hold them for longer periods of time. The “leverage” associated with these investments resets daily, which means that these securities are supposed to be purchased and resold within a single trading day. An investor’s overall success while investing in leveraged ETFs is a direct result of how many successful trading days occurred, as opposed to if the value of the index has increased since the customer began purchasing leveraged ETFs. A customer who holds a leveraged ETF for a significant period of time, can experience serious financial detriment even if the value of the index has increased since the ETF was purchased.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. 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 across the nation. If you, or someone you know, have lost money investing with James Dresselaers, please contact Oakes & Fosher for a free and private consultation. We work on a contingency basis, which means there are no fees charged unless we collect for you.
