JP Turner Ordered by FINRA to Pay Over $700K for Unsuitable ETF Sales and Excessive Mutual Fund Switching

On December 5th., 2013, the Financial Industry Regulatory Authority (FINRA) ordered Atlanta-based broker-dealer J.P. Turner & Company, L.L.C. to pay $707,559 in restitution to 84 customers for sales of unsuitable leveraged and inverse exchange-traded funds (ETFs) and for excessive mutual fund switches.

Investors should be made aware by their brokers that they could possibly suffer significant losses in the ETF market. The leveraged and inverse ETFs reset daily, which means that they are designed to achieve their objectives on a daily basis so their performance can quickly diverge from the performance of the underlying index or benchmark.

According to FINRA, J.P. Turner failed to "establish and maintain a reasonable supervisory system and instead, supervised leveraged and inverse ETFs in the same manner that it supervised traditional ETFs." J.P. Turner also failed to provide adequate training regarding the ETFs. Registered representatives recommended these complex ETFs without performing reasonable diligence, and many J.P. Turner customers held leveraged and inverse ETFs for several months. J.P. Turner failed to determine whether the ETFs were suitable for at least 27 customers, many of whom were retirees and had conservative portfolios. They sustained net losses of more than $200,000. Additionally J.P. Turner failed to reject more than 2,800 mutual fund switches that appeared on the firm's switch exception reports, resulting in 66 customers paying commissions and sales charges of more than $500,000 in unsuitable mutual fund switches.

According to FINRA's VP and Chief of Enforcement, "Securities firms and their registered reps must understand the complex products they are selling and the risks inherent to the products, and be able to determine if they are suitable for investors before recommending them to retail customers. Firms also have a fundamental obligation to monitor conservative investments such as mutual funds to ensure that investors are not abused by excessive trading."

Leveraged ETFs are highly speculative investments that should not be held for longer than a single trading day and may have not been suitable for some investors. If you have suffered losses due to the recommendation of a broker or brokerage firm, you may have a claim for damages. Please contact our securities attorneys to discuss your rights at: (888) 760-6552.

On December 5th., 2013, the Financial Industry Regulatory Authority (FINRA) ordered Atlanta-based broker-dealer J.P. Turner & Company, L.L.C. to pay $707,559 in restitution to 84 customers for sales of unsuitable leveraged and inverse exchange-traded funds (ETFs) and for excessive mutual fund switches.

Investors should be made aware by their brokers that they could possibly suffer significant losses in the ETF market. The leveraged and inverse ETFs reset daily, which means that they are designed to achieve their objectives on a daily basis so their performance can quickly diverge from the performance of the underlying index or benchmark.

According to FINRA, J.P. Turner failed to "establish and maintain a reasonable supervisory system and instead, supervised leveraged and inverse ETFs in the same manner that it supervised traditional ETFs." J.P. Turner also failed to provide adequate training regarding the ETFs. Registered representatives recommended these complex ETFs without performing reasonable diligence, and many J.P. Turner customers held leveraged and inverse ETFs for several months. J.P. Turner failed to determine whether the ETFs were suitable for at least 27 customers, many of whom were retirees and had conservative portfolios. They sustained net losses of more than $200,000. Additionally J.P. Turner failed to reject more than 2,800 mutual fund switches that appeared on the firm's switch exception reports, resulting in 66 customers paying commissions and sales charges of more than $500,000 in unsuitable mutual fund switches.

According to FINRA's VP and Chief of Enforcement, "Securities firms and their registered reps must understand the complex products they are selling and the risks inherent to the products, and be able to determine if they are suitable for investors before recommending them to retail customers. Firms also have a fundamental obligation to monitor conservative investments such as mutual funds to ensure that investors are not abused by excessive trading."

Leveraged ETFs are highly speculative investments that should not be held for longer than a single trading day and may have not been suitable for some investors. If you have suffered losses due to the recommendation of a broker or brokerage firm, you may have a claim for damages. Please contact our securities attorneys to discuss your rights at: (888) 760-6552.