JP Morgan to pay $650000 in fines plus restitution to customers for Supervisory Issues
According to the Financial Industry Regulatory Authority (FINRA) on June 22, 2020, J.P. Morgan Securities LLC (CRD #79, New York, New York) was censured, fined $325,000 and ordered to pay $333,619.34, plus interest, in restitution to customers in connection with the sales of volatility-linked exchange traded products (volatility ETPs).
The firm reportedly consented to the sanctions and to the entry of findings that it failed to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable FINRA rules regarding sale of volatility ETPs.
According to FINRA, while the firm was aware of the unique characteristics of volatility ETPs, it made these products available for solicited purchases without having a reasonable system in place to ensure that its brokers and customers understood the nature and characteristics of these products or the risks inherent in holding them for long-term periods.
Some of the firm’s customers, including those without high risk tolerances or aggressive investment objectives, reportedly purchased volatility ETPs on a solicited basis, held them for lengthy periods of time and sustained losses.
The firm purportedly did not provide any training or guidance to its brokers or supervisors specifically regarding volatility ETPs, nor did it identify the risks associated with volatility ETPs in its WSPs, according to FINRA. In addition, the firm reportedly did not conduct reasonable post-approval review of the products’ performance and risk profile or take other reasonable steps to supervise solicited sales of the products to customers.
For FINRA’s full findings see FINRA Case #2018057508101.
The White Law Group is investigating the liability that brokerage firms may have for recommending complex, often extremely high-risk, volatility ETPs. With the market in turmoil, many investors who purchased such investments believing they provided downside protection or were akin to bonds because of the dividend component are instead finding that these products can indeed suffer enormous losses.
Brokers often pitch structured products, as providing “downside protection” against losses to a related index while allowing modest upside gain potential. Of course, this is only true if the value of the index doesn’t fall below a predetermined price. If the price falls below that point, the losses in structured notes can still be huge.
These products typically pay a high fee to the financial advisors that sell them.
Filing a Complaint against your Brokerage firm
If you suffered losses investing in volatility ETPs with J.P. Morgan Securities, the securities attorneys at The White Law Group may be able to help you. For a free consultation, please call the offices at (888) 637-5510.
The foregoing information, which is all publicly available on FINRA’s website, is being 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 Franklin, Tennessee.
For more information on The White Law Group, please visit www.whitesecuritieslaw.com