According to the Financial Industry Regulatory Authority (FINRA) they have fined Chase Investment Services $1.7 million and ordered them to “reimburse customers more than $1.9 million for losses incurred from recommending unsuitable sales of unit investment trusts (UITs) and floating rate loan funds.” Chase has “neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
FINRA’s press release stated that their “investigation found that Chase brokers recommended the purchase of UITs and floating rate loan funds to unsophisticated customers with little or no investment experience and conservative risk tolerances, without having reasonable grounds to believe that those products were suitable for the customers.” Similarly, they found the supervisory structure to be inadequate to monitor and prevent the alleged improprieties.
Both UITs and floating rate loan funds are somewhat complicated investment vehicles that sometimes invest in debt instruments that are considered “below investment-grade, or ‘junk.’” FINRA enforcement executive Brad Bennett was quoted as saying “With the growing number of complex products in the market today, it is incumbent upon firms to properly train and provide guidance to their brokers about the products that they sell and supervise the sales practices of their brokers. Chase allowed its brokers to sell risky UITs and floating-rate loan funds without providing them with the training, guidance and supervision necessary to determine whether these products were suitable for their customers, which resulted in losses for Chase’s customers.”
It is of note that WaMu Investments, Inc. was also included in FINRA’s findings. WaMu merged with Chase in 2009 and was found to have also sold unsuitable floating rate loan funds as well as having inadequate supervision in place to prevent such unsuitable recommendations.
If you lost money due to your investment in a unit investment trust (UIT) or a floating rate loan fund sold by Chase Financial Services or another FINRA registered broker-dealer and would like to speak to a securities attorney about your potential to recover investment losses though FINRA arbitration, please call our Chicago office at 312-238-9650.
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.
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