J.P. Turner Ordered by FINRA to Pay Clients Over $700,000 in Restitution for Unsuitable ETFs

J.P. Turner & Company, L.L.C. an Atlanta-based brokerage was ordered by the Financial Industry Regulatory Authority (FINRA) to pay $707,559 as restitution to 84 of its customers.

The firm was found by FINRA to have made excessive mutual fund switches as well as engaged in numerous sales of unsuitable leveraged and inverse exchange-traded funds (ETFs).

From January 2008 until August 2009, J.P. Turner failed to properly supervise the sales of leveraged and inverse ETFs, which are considered high risk products due to their  volatile nature. During that period, J.P. Turner customers bought and sold over $185 million nontraditional ETFs.

“Such ETFs are not suited for long-term investments and are instead designed to be traded frequently,” said securities lawyer Alan Rosca. J.P. Turner, however was found to have supervised the sales of the specialized ETFs in the same way as traditional ETFs according to FINRA. As a result, at least 27 customers, including retirees and those with conservative investment goals, lost a total of $200,000, FINRA said.

Further, a broker for J.P Turner was accused of engaging in a pattern of unsuitable mutual fund switching. The broker on 537 occasions advised clients, without regards to the clients’ risk tolerance and ages, to sell mutual funds within a month to a year after purchasing them, according to FINRA. The recommendations to 66 customers generated $445,000 in commissions and $57,000 in sales charges.

The firm failed to establish and maintain a reasonable supervisory system designed to prevent unsuitable mutual fund switching and lacked sufficient procedures to adequately monitor for patterns involving mutual fund switches, according to FINRA.

J.P. Turner neither admitted nor denied FINRA’s charges despite agreeing to settle. The firm has stopped offering leveraged and inverse ETFs and has already enhanced its policies and procedures related to mutual fund activities, according to a spokeswoman for J.P. Turner.

Since 2009, FINRA and other regulators have begun issuing warnings about the sale of leveraged and inverse ETFs due to the concerns that brokers were selling them to long-term investors resulting in heavy losses.

The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting investors with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Alan Rosca or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


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