Michael Victor Young


May 17, 2024

Type of alert:

Misrepresentations and Omissions  

Michael Victor Young, a Fargo, North Dakota-based broker and investment advisor, has been sued by one of his clients for multiple counts of alleged misconduct.

Mr. Young, who has been in the industry for more than 20 years, is an investment advisor for Classic Asset Management and a registered representative of its broker-dealer affiliate, Classic LLC. As of early 2024, Mr. Young also registered with Aurora Securities, another brokerage firm, and Secure Asset Management, a different investment advisor firm. Investors can read more about Mr. Young and the allegations against him on his BrokerCheck report, available here: https://brokercheck.finra.org/individual/summary/3242751.

According to the customer complaint against him, Mr. Young engaged in various misrepresentations regarding the sale of leveraged exchange traded funds (LETFs). Many investors may be familiar with traditional ETFs and believe that LETFs are basically the same. But they aren’t. Whereas most traditional ETFs are a simple way to diversify a portfolio and help investors to easily and cheaply guard against risk, LETFs often do the opposite.

LETFs are complex financial instruments which use debt, referred to as “margin,” and various derivative securities such as futures, options, and “swaps.” As a result, LETFs often expose investors to greater, and not less, risk. Investors should be aware that investing in LETFs may come with the following risks:

  • Volatility: Whereas traditional ETFs typically track an underlying index on a 1:1 ratio, LETFs magnify gains and losses in the underlying index by a factor of 2 or 3, making them far more volatile.
  • Expense: Due to the extra expenses and from borrowing and from paying “premiums” on some derivatives, LETFs usually have far higher expense ratios than traditional ETFs.
  • Short Term Investments: LETFs are short-term investments, which are typically only used by day traders. Buying and holding LETFs could lead to significant losses.

LETFs are probably unsuitable for most conservative investors and anyone considering investing in LETFs should be properly informed of the attendant risks. ChapmanAlbin has been fighting for investors’ rights for more than 25 years. If you believe you have been wronged by the misconduct of an investment professional, contact ChapmanAlbin for a free consultation.

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