The Financial Industry Regulatory Authority (FINRA) announced Monday, Oct. 16, that it has ordered Wells Fargo & Co. (WFC) - Get Report to pay $3.4 million in restitution to customers who received "unsuitable recommendations" regarding volatility-linked exchange-traded products.

The fine will be handed to Wells Fargo Clearing Services LLC and Wells Fargo Advisors Financial Network LLC for their "supervisory failures" found between July 2010 and May 2012. FINRA said the bank's advisors didn't fully understand the risks and features of ETPs before offering advice to clients.

"Certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers' equity positions in the event of a market downturn," FINRA wrote in a statement. "In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy."

In settling with FINRA, Wells Fargo neither denied nor admitted to the charges. The bank only consented to the "entry of FINRA's findings."

Wells Fargo shares traded slightly lower at midday Monday.

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