* FINRA says investments at issue contained junk bonds
* Chase, WaMu made sales to unsophisticated investors
* No admission of wrongdoing
Nov 15 A U.S. regulator ordered JPMorgan Chase
& Co to pay $3.62 million in fines and reimbursement
for recommending investments linked to junk bonds to
unsophisticated customers who might not have been able to take
on the risks.
The Financial Industry Regulatory Authority said brokers
at Chase Investment Services Corp recommended that customers
with little investing experience and "conservative" risk
tolerance buy unit investment trusts (UIT) and floating-rate
It also said brokers at Washington Mutual Inc, whose
banking business was bought by JPMorgan Chase in 2008, made
similar recommendations concerning the loan funds.
FINRA also said Chase and Washington Mutual failed to
properly supervise the sale of these investments, and did not
ensure that the investments were suitable for its customers.
A UIT contains a basket of securities that can include
"junk" bonds, which carry high yields but greater credit risk.
Floating-rate loan funds are mutual funds that typically
invest in senior secured loans with junk credit ratings.
The penalty includes a $1.7 million fine plus $1.92
million of restitution to customers who suffered losses.
JPMorgan Chase did not admit or deny the charges in
agreeing to settle. FINRA in 2009 fined Washington Mutual for
inadequate supervision related to UIT sales.
JPMorgan is the largest U.S. bank. It did not immediately
respond to requests for comment.