But volatility-linked ETPs, which give retail investors access to the Chicago Board Options Exchange Volatility Index, are typically short-term trading investments with considerable risk that tend to lose value over time.

FINRA says the products "should not be used as part of a long-term buy-and-hold investment strategy," according to a release from the industry watchdog.

Volatility ETPs became available to retail investors in 2009. At that time, Wells Fargo began vetting the products, and developed internal procedures for limiting recommendations on the products to only investors that met a specific risk profile.

But the firm failed to impose those restrictions until May of 2012. At that time, Wells Fargo implemented enhanced supervisory systems, and restricted sales of volatility ETPs to only clients that met a risk profile of "trading and speculation." Branch managers were also required to contact investors 30 days after the sale of the products to remind clients of the high-risk nature of the products.

FINRA said Wells' self-correction was made before regulators noted the suitability breaches. Moreover, Wells Fargo engaged a third-party consultancy to determine the amount of restitution for all affected clients before FINRA concluded its investigation.

"FINRA took Wells Fargo's previous corrective actions and cooperation into account when assessing the sanctions in this matter, and encourages member firms to assess their own sales and supervision of volatility ETPs," the agency explained in a press release.

In a separate matter in 2012, FINRA fined Wells Fargo for unsuitable recommendations on other non-traditional ETPs. 

Wells Fargo discontinued offering volatility-linked ETPs last year. In agreeing to the order, the firm neither denied nor admitted FINRA's charges.

"We are committed to helping our clients achieve their investment goals through advice that is regularly reviewed and aligned to their objectives and risk tolerances," the company said in a statement. "In cooperating fully with FINRA, we have made significant policy and supervision changes, including the discontinuation of the ETPs in focus."

In accord with announcing the settlement with Wells Fargo, FINRA issued a regulatory notice on volatility-linked ETPs.

"Volatility-linked ETPs are complex products that are not suitable for all investors," the notice says. "Firms are reminded of their obligation to vet complex products, to put reasonable supervisory controls in place, and to train their registered representatives and supervisors to ensure that suitability and other obligations under FINRA rules are met."

Restitution to the roughly 1,300 investors ranges from a couple hundred dollars in some cases to more than $81,000 in the case of one investor.

In 2016, FIRA brought 1,434 disciplinary actions against member brokers and firms, and issued $176.3 million in fines.

Another $27.9 million in restitution to harmed investors was ordered. FINRA referred more than 785 fraud and insider trading cases to the SEC and other agencies for litigation and-or prosecution, according to the agency's website.