Insigneo Securities, LLC broker Filipe Henao Vargas (CRD# 5140431) faces a customer complaint for Barclays Bank iPath Series B S&P 500 VIX Short Term Futures Exchange-Traded Notes losses. He has been registered with Insigneo Securities, LLC in Miami, Florida, since 2016.
In December 2023, the broker consented to the sanctions and to the entry of findings that he “exercised discretion without written authorization in a customer’s account.” He was ordered to pay $7,500 in civil and administrative penalties and fines and suspended for 45 days. According to the Acceptance, Waiver & Consent (AWC), he “exercised discretion in a customer’s account by initiating a substantial short position in a volatile exchange-traded note. After the trade went against his customer, he closed out the position. He did not have written authorization from the customer, or permission from his member firm, to exercise discretion in the account. Henao aggravated his misconduct by using an unapproved communication channel to exchange messages concerning the trades with a family member of the customer after the fact.”
He has been the subject of one customer complaint, according to his CRD report. The complaint was filed in September 2020. The customer sought $1,300,000 million in damages and it was settled for $1,075,000. The complaint took place while he was registered with Insigneo Securities, LLC and the complaint was regarding Barclays Bank iPath Series B S&P 500 VIX Short Term Futures Exchange-Traded Notes (ETNs), which are traded under VXX.
The complaint was regarding short trade for 20,000 related to the sale of BARCLAYS BK VIX SHORT TERM FUTURES ETN; the broker placed a subsequent trade to cover the short. The customer complaint stated, “that he was underwhelmed by the fluctuations and volatility in his account which had resulted in a substantial account value depreciation and by the lack of communication from Mr. Henao. The Firm has reviewed the complaint and has responded to the client and his attorney on September 2nd 2020. The Firm received an arbitration claim for this complaint on September 8th, 2020.” The customer is seeking $1,300,000 in damages and the case is currently pending.
It is alleged that he engaged in unauthorized and unsuitable trading in a customer’s account between February and March 2020, causing significant investment losses during this short period of time.
iPath S&P 500 VIX Short-Term Futures ETN is an inverse volatility-linked exchange-traded fund that hit some market volatility in February 2018, causing the Chicago Board Options (CBOE) Volatility Index (VIX) Index to rise rapidly, and the VXX to lose value. Inverse volatility-linked ETFs return a profit when the market experiences periods of low volatility. This is an extremely complex and risky security that is not suitable for the average investor, hedging a bet that the market will remain relatively stable. Some inverse ETFs are designed to provide investors with positive returns when the VIX falls, and inversely negative when the VIX rises. The VIX Index is referred to as a fear gauge for the market.
According to publicly-available records, he established a short position in the VXX on margin during the February 2020 time period. However, due to the Coronavirus’ impact on the economy and financial markets, the client’s account took a hit. It is alleged that instead of informing the client of the loss, Henao shorted another large investment on behalf of the client, which was purchased at a cost that was 25% more than the first investment he made on behalf of the client. Unfortunately for the client, when the market saw a 30% decline, Henao was forced to cover the short positions, costing the client two times what he borrowed on margin. This caused the client to suffer a loss of $1.3 million in just three short weeks.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Insigneo Securities, LLC may be liable for investment or other losses suffered by Filipe Vargas’ customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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