According to new s release, the Financial Industry Regulatory Authority (FINRA) ordered broker-dealer J.P Turner & Co to pay more than $700,00 in restitution to customers. FINRA found that between 2008 and 2009 J.P. Turner failed to properly supervise the sale of leveraged and inverse ETFs. Apparently J.P. Turner failed to provided adequate training for their registered representatives (brokers) and allowed them to sell these potentially volatile non-traditional ETFs without fully understanding the risks and features.
In addition, FINRA announced that between 2008 and 2010 J.P. Turner failed to maintain a supervisory system designed to prevent unsuitable mutual fund switching. Due to the cost of commissions and transactions fee, mytual funds are typically held as long-term investments. According to Investment News, on 537 occasions brokers recommended that customers sell mutual funds less than one year after their purchase. As a result, customers paid more than $500,000 in commissions and sales charges.
Broker-dealers have a responsibility to perform adequate due diligence to understand the risks and benefits of an investment. In addition, industry regulations require brokers to take into account such factors as age, net worth, risk tolerance and investment objectives to determine suitable investment recommendations. When broker-dealers fail to comply with industry regulations and fail to adequately supervise their brokers they can be liable for investment losses. J. P. Turner settled the dispute without admitting or denying FINRA’s charges.
The foregoing information, which is publicly available, has been provided by The White Law Group. 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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