On November 13, 2020, the Securities and Exchange Commission announced that it had settled actions against five firms registered as investment advisers and/or broker-dealers for violations related to the sales of complex exchange-traded products (“ETPs”). These actions are the first to arise from the Division of Enforcement’s “Exchange-Traded Products Initiative” (“ETP Initiative”) and focus on the firms’ sale of volatility-linked ETPs. According to the cease-and-desist orders issued in connection with the actions, although the offering documents for these products specified that the products were intended to be held short term and were likely to experience a decline in value when held long term, the firms’ registered representatives nevertheless recommended that certain investors purchase and hold the products for extended periods of time. The SEC found that the firms did not have adequate policies and procedures to ensure that their registered representatives were properly trained on or adequately understood the nature of the products. Although these are the first actions the SEC has announced specifically in connection with the ETP Initiative, they are part of a series of SEC enforcement actions addressing the risks to investors of investment professionals’ inadequate understanding of complex products. Additionally, in announcing these actions, the SEC emphasized its use of data analytics to identify unsuitable sales of complex financial products, consistent with the Division of Enforcement’s increasing utilization of such processes to identify and investigate instances of potential misconduct.