Wolper Law Firm Files $1.3 Million FINRA Arbitration Claim Against Insigneo Securities Based On Alleged Unauthorized Trading In The VXX By Financial Advisor Felipe Henao
The Wolper Law Firm, P.A. has filed a FINRA arbitration claim against Miami, FL based Insigneo Securities, alleging that Financial Advisor Felipe Henao (CRD 5140431) engaged in unauthorized and unsuitable trading in a customer’s account in February and March 2020, causing damages of $1.3 million in three weeks.
Felipe Hanao has been in the securities industry since 2007 and previously worked for HB Asset Management, Bolton Global Asset Management and Merrill Lynch.
Unauthorized trading occurs when a Financial Advisor places trades in a customer account without first getting prior approval from the customer. FINRA rules require that all purchase and sale transactions be authorized by the customer prior to the transaction.
According to the allegations in the FINRA arbitration claim filed by the Wolper Law Firm:
“In late February 2020 and early March 2020, Financial Advisor, Felipe Henao (“FA Henao”), engaged in unauthorized discretionary trading in Claimant’s account. The unauthorized trading occurred in a single security—the Barclays Bank IPATH Series B S&P 500 VIX Short Term Futures Exchange Traded Note, which trades under the symbol “VXX.” The VXX is a speculative exchange traded note that is designed to provide investors with exposure to futures contracts on the Chicago Board of Options Exchange (CBOE) Volatility Index known as the “VIX.” For many years, the VIX has been interchangeably referred to as the “fear index” because it is intended to use technical data to capture an emotional consensus about the short-term direction of the equities market. It is often used as a benchmark to guide short-term trade activity among sophisticated institutional traders.”
“On February 28, 2020, without authorization from Claimant, FA Henao established a large “short” position in the VXX in the amount of $481,510 on margin, which is consistent with his belief that the financial markets would appreciate. FA Henao was dead wrong. The impact of the Coronavirus on the financial markets was just beginning and would get much worse. Instead of closing this position and informing Claimant of the loss, FA Henao concealed the loss, “doubled down” and “shorted” another $603,570 of the VXX on March 6, 2020 at a cost that was 25% higher than his first trade. This trade was also placed without authorization. FA Henao was dead wrong again. The major market indices continued to display extreme volatility, eventually declining 30%. On March 17, 2020, FA Henao was forced to cover the “short” positions in the VXX, which cost Claimant twice the amount that FA Henao unlawfully borrowed on margin to establish the opening positions. This resulted in a trading loss of nearly $1.3 million in a matter of three weeks.”
The trading in the customer’s account was particularly aggressive. The VXX is a speculative derivative trading vehicle intended to provide a customer with exposure to market volatility. There are no underlying fundamentals associated with the VXX. Investing in the VXX, particularly at the concentration levels in the account handled by Felipe Henao, is alleged to have been unsuitable.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org
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