Business Trial Group Investigates JP Morgan Volatility-Related ETP Losses

The securities attorneys at Morgan & Morgan’s Business Trial Group are investigating investment losses in volatility-related exchanged traded products (ETPs) sold by JP Morgan Securities LLC and other brokerage firms.

FINRA recently entered into an Acceptance, Waiver, and Consent (AWC) settlement with JP Morgan, which requires the firm to pay over $650,000 in fines and restitution to customers for improper sales of volatility ETPs. The findings state that JP Morgan failed to ensure that its brokers and customers understood the risks of holding volatility ETPs for long periods of time.  The findings also state that JP Morgan solicited customers (including those who did not have a high risk tolerance and did not want to invest aggressively) to purchase volatility ETPs, and those customers held them for a significant time and sustained losses. According to FINRA’s findings, JP Morgan failed to provide any training or guidance to its brokers or managers regarding volatility ETPs.  The firm also failed to properly supervise sales of volatility ETPs.

Volatility measures the degree of variation in a particular instrument’s trading price over a certain time period.  For example, when stock prices endure wild swings, volatility is high.  In the past decade, many funds and trading strategies have been tied to volatility or the Volatility Index (VIX).  When markets are relatively calm, volatility funds can provide attractive returns.  But when volatility unexpectedly returns, volatility funds may experience heavy losses.

2020 has been marked by extreme volatility.  This has caused many volatility ETPs to sustain heavy losses.  If you were invested in a volatility fund, you may have suffered substantial losses.  The securities attorneys at Morgan & Morgan’s Business Trial Group are here to help. Contact us for a free case review.

The Business Trial Group is part of the largest contingency law firm in the nation, with more than 700 lawyers and offices across the country.  We have helped investors recover investment losses totaling tens of millions of dollars. We are only paid if we successfully recover money for you.