A financial investment market regulator has bought Wells Fargo to pay $3.4 million to brokerage clients who lost money purchasing complex securities that even Wells Fargo brokers didn’t totally understand.

The Financial Industry Regulatory Authority, or Finra, stated Monday that some Wells Fargo agents erroneously believed a type of complicated security connected to the popular Vix market-volatility index might be used to secure long-lasting financiers in case of a stock exchange tumble.

The securities in question were suitable just for short-term financiers and were most likely to lose considerable value over time, Finra stated.

The regulative body stated Wells Fargo brokers were offering these securities, called volatility-linked exchange-traded items, “without completely understanding their threats and functions.” Wells Fargo also did not have a “sensible system” to monitor how when those securities were offered and did not correctly train brokers.

The incorrect sales happened from July 2010 to May 2012 and were determined and reported by Wells Fargo, which fixed the issue, Finra stated.

The finding was unassociated to the bank’s continuous evaluation of its customer sales practices triggered by in 2015’s sham accounts scandal. Rather, the bank in 2012 was fined by Finra for incorrect sales of a different kind of intricate financial investment item, which triggered the bank to change its financial investment standards for the Vix-linked items.

The bank accepted to pay $3.4 million in restitution as part of a settlement with Finra but was not fined.

Wells Fargo did not confess to the misdeed, but Finra kept in mind the bank’s actions were a consider the result of the case.

” Finra looks for restitution when clients have been damaged by a member company’s misbehavior,” Finra Executive Vice President Susan Schroeder stated in a declaration. “We also credit companies that proactively spot and fix problems prior to detection by Finra, as Wells Fargo carried out in this matter.”.

The restitution payments will go to the holders of about 1,300 brokerage accounts. The payments vary from under $1 to $80,000, with much amounting to many hundred or a couple of thousand dollars, according to Finra files.

Wells Fargo was offering the securities to conservative, long-lasting financiers who did not have the appropriate threat profile up until May 2012, Finra stated. After that, the bank made the securities readily available just to financiers ready to take more threat. The bank stated it has since stopped offering the volatility-linked items completely.

Phil Aidikoff, a securities lawyer in Los Angeles who represents financiers and brokers, stated cases like this including nontraditional financial investment items prevail.

Brokers at huge companies, Aidikoff stated, generally do not evaluate financial investment items themselves and rather count on their companies to carry out due diligence. If the parent company states an item isn’t too dangerous for regular financiers, brokers will provide it, even if they do not understand it.

” You have some brokers who have remained in business a very long time, and you have some people who were offering stereo devices 6 months earlier,” Aidikoff stated. “If brokers comprehended what the financial investment was, they should not have offered it. They didn’t understand. They just count on what they were informed by the company.”.