The Financial Industry Regulatory Authority says it has fined the securities unit of a bank in connection with allegations of unsuitable sales of deferred variable annuities.
Reps at Banc One Securities Corp., Chicago, a division of JPMorgan Chase & Company, New York, made unsuitable VA sales to 23 customers, and most of those customers were over age 70, according to FINRA, Washington.
FINRA also alleges that Banc One Securities had insufficient methods for controlling annuity exchanges.
FINRA has imposed a $225,000 fine on the Banc One Securities, and it is requiring Banc One Securities to allow each of the 23 customers who bought the unsuitable annuities to sell their annuities without penalty. Ordinarily, the sales would have been subject to a 6-year surrender period, and the sellers would have had to pay surrender charges as high as 7% of the amount invested if they sold their annuities in the first 2 years, FINRA says.
Banc One Securities, which merged with J.P. Morgan Securities Inc. in 2006, will also pay restitution of about $6,500 to 2 customers who incurred surrender charges when exchanging annuities, FINRA says.
JPMorgan Chase declined to comment on the case.