JPMorgan Chase & Co. has been ordered by the Financial Industry Regulatory Authority (FINRA) to reimburse customers more than $1.9 million for losses that occurred from unsuitable investment recommendations. The firm also has to pay a fine of $1.7 million.
According to FINRA, brokers with Chase Investment Services Corp. made nearly 260 unsuitable investment recommendations involving UITs and floating-rate loan funds to unsophisticated customers with little or no investment experience and who had conservative risk tolerance. As result of the investments, Chase customers suffered losses of about $1.4 million.
FINRA also found that Chase failed to implement supervisory procedures to reasonably supervise its sales of UITs and floating-rate loan funds.
A UIT is an investment product that consists of a diversified basket of securities, which can include risky, speculative investments such as high-yield/below investment-grade or “junk” bonds. Floating-rate loan funds are mutual funds that generally invest in a portfolio of secured senior loans made to entities whose credit quality is rated below investment-grade, or “junk.”