FINRA suspended former JP Morgan Securities broker Todd Jason Jones and fined him $15,000 for exercising discretion in customer accounts without authorization to purchase over $200,000-worth of VelocityShares 3x Long Crude Oil (UWTI), a complex exchange-traded note (ETN).
The findings state that Jones (CRD #5913166), who served as a registered representative at JP Morgan's Seattle, Washington branch, exercised discretion without written authority in the accounts of 12 firm customers, to purchase UWTI, which is a leveraged ETN.
In January 2016, FINRA released its yearly priories letter, which followed an SEC investigation into sales practice violations pertaining to retail sales of structured securities products, including leveraged and inverse ETFs and ETNs.
Among the list of structured products on FINRA/SEC's radar was the Credit Suisse Velocity Shares 3X Long Crude ETN (UWTI), with the SEC specifically finding "several significant deficiencies in the areas of suitability and supervision," further concluding that sales practice violations—including supervisory and compliance failures—were present in "all of the examined firms."
The SEC also cited the JP Morgan Strategic Volatility Index and Treasure Notes Futures Tracker as additional products with heightened risk of sales practice abuse.
Investigators wrote that Jones additionally mismarked most of the unauthorized trades as unsolicited, which caused JP Morgan to maintain inaccurate books and records.
In a potential explanation of the mismarked trades as unsolicited, FINRA found that JP Morgan policy permitted the purchase of leveraged exchange-traded products such as UWTI on a strictly unsolicited basis. The report also indicated that in initial questioning, Jones claimed incorrectly that the trades were unsolicited before admitting that they were not unsolicited.
JP Morgan terminated Jones for exercising discretion without written authorization, mismarking orders as unsolicited, and misrepresenting the origin of such orders.
Prior to JP Morgan, Jones was affiliated with the Seattle, WA branch of Merrill Lynch.
If you have invested with ex-JP Morgan Securities broker Todd Jason Jones or with any financial advisor in a complex product such as UWTI, or whose unauthorized use of discretion to effect excessive, unsuitable or unwanted trades in your account has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.