Thursday, November 17, 2011

FINRA Orders Chase to Reimburse Customers $1.9 Million

FINRA announced that it has ordered Chase 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. FINRA also fined Chase 1.7 million.
FINRA's investigation found that Chase brokers made recommendations 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. FINRA also found that Chase failed to properly supervise its sales of UITs and floating rate loan funds.
Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "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."
FINRA's also found that WaMu Investments, Inc., which merged with Chase in July 2009, made similar unsuitable recommendations to customers. FINRA found that like Chase, WaMu failed to provide adequate training and failed to reasonably supervise the sale of floating-rate loan funds to customers.
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