FINRA has ordered Wells Fargo's brokerage arm to return $3.4 million to about 1,300 retail brokerage clients who were solicited to buy volatility-linked exchange-traded products between July 1, 2010 and May 1, 2012.
Broker recommendations to buy the volatility-linked ETPs did not fit retail investors' risk profiles, and therefore failed to meet FINRA's suitability standard for all investment recommendations.
Officials from FINRA, the brokerage industry's self-regulated arm, and Wells Fargo, confirmed the breaches of the suitability standard on the recommendations of volatility ETPs were the result of brokers' ignorance of the complex products, and not necessarily the result of churning, or the practice of recommending unsuitable products to generate commission revenue.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
