The Financial Industry Regulatory Authority (FINRA), Wall Street's watchdog, has asked the brokerage arms of Wells Fargo & Co and Bank of America Corp to pay more than $5 million in reimbursement and fine for selling floating-rate bank loan funds.
FINRA ordered Wells Fargo Advisors LLC to reimburse about $2 million and pay an additional $1.25 million in fine. It asked Bank of America's Merrill Lynch unit to reimburse about $1.1 million and pay $900,000 in fine.
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The brokerages have been asked to reimburse the amount because the risk tolerance limit and financial conditions of their customers did not justify the purchases, FINRA said.
Floating-rate bank loan funds are mutual funds that generally invest in a portfolio of secured senior loans made to entities whose credit quality is rated below investment-grade.
The brokerages neither admitted nor denied the charges.
(Reporting by Avik Das in Bangalore; Editing by Maju Samuel)