It is important to note that the word “you” means “you”. Securities and Exchange Commission (“Commission”) has announced that public administrative and cease-and-desist proceedings have been instituted against Samuel Masucci, Exchange Traded Managers Group LLC. ETF Managers Group LLC The collectively referred to as “Respondents”). The proceedings stem from a prohibited, joint transaction between investment advisers Masucci & ETF Managers Group LLC & Exchange Traded Managers Group LLC – to the detriment and harm of their client ETFMG Alternative Harvest ETF.”MJ”).
Violations
This prohibited transaction is a part of this. Masucci and the Adviser Their duty of loyalty was violated. They gave advice which favored their personal interests over those of their client MJ. And they failed to disclose fully their financial conflict of interest to MJ’s Independent Trustees. They also breached their duty by failing to act for the benefit of their client MJ.
Urgent Need of Financing
In the second half, the Respondents needed to pay tens or even hundreds of millions of dollars in order to settle the private litigation. They would have faced bankruptcy, and possibly lost Adviser’s advisory contract with MJ and other ETF clients, if they did not reach this settlement. They used MJ’s lucrative securities lending revenue stream to negotiate $20 million in financing on favorable terms from Company A—MJ’s then-custodian and securities lender. Masucci agreed, in return, to keep MJ’s Securities Lending Business at Company A despite the better offers made by other securities lender, who Masucci, and Adviser, understood would have provided MJ with millions more revenue.
Sanctions Imposed
- Bar (Permanent).Broker, Dealer, Investment Advisor, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, or NRSRO. The right to re-enter after three (3) year, starting on 8/1/2023.
- Cease and Desist
- Civil and Administrative Penalty/FineAmounting to $400,000.
- Prohibition
- Undertaking
Investors Can Recover Losses Through FINRA Arbitration
Investors who have lost money due to the actions or inactions of Samuel Masucci Then, there is the ETF Managers Group LLC Finra arbitration is a way for investors to seek compensation for their losses. Finra (the Financial Industry Regulatory Authority) provides investors with an arbitration platform to file claims against brokerage firms and brokers. Arbitration is often faster and less costly than traditional litigation. It’s a good option for most investors.
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Investors may file a complaint with Finra, detailing the misconduct as well as the losses they have suffered. A panel of arbitrators will hear the case and make a determination based on evidence. The arbitrators can award damages if they rule in the investor’s favor.
Investors should act fast, since there is a 6-year rule on eligibility for filing claims. Investors may also want to consider hiring a lawyer to assist them in the arbitration process. This will increase their chances of success.
