In June 2020, J.P. Morgan was ordered by FINRA to pay $650,000, which included $325,000 in fines as well as $333,619.34 in restitution, plus interest, to its customers regarding supervisory issues related to the sale of volatility-linked exchange-traded products (ETPs). Volatility-linked ETPs pay a high fee to the brokers that sell them.
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,” according to the Acceptance, Waiver & Consent.
It is alleged that many investors believed the volatility-linked ETPs provided downside protection, while in reality investors suffered enormous losses.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, J.P. Morgan may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.