According to the Investment News, Massachusetts’ top securities regulator is suing RBC Capital Markets LLC and one of its former registered representatives over the sale of leveraged exchange-traded funds, saying they sold them to clients who didn’t understand how the investments worked.

Secretary of the Commonwealth William F. Galvin said RBC Capital and Michael Zukowski, a former agent, used “dishonest practices” in selling the funds, according to a statement e-mailed today. Galvin is seeking restitution to Massachusetts investors, a cease and desist order, and an administrative fine.

Galvin said that Zukowski, who worked in the firm’s Osterville office, sold clients “non-traditional” leveraged and inverse ETFs. Leveraged ETFs use swaps or derivatives to amplify daily index returns, while the inverse funds are designed to move in the opposite direction of their benchmark. The Financial Industry Regulatory Authority warned investors and fund sellers in June 2009 that such ETFs might not be a good fit for long-term investors. Galvin opened a probe into the products in July 2009.

If you have suffered losses in ETFs sold to you by RBC Capital, the securities attorneys of The White Law Group may be able to help.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at http://whitesecuritieslaw.com.