The Financial Industry Regulatory Authority has sanctioned four large financial firms with a total of $9.1 million in fines and restitution for not having adequate supervisory systems in place for billions of dollars of sales of leveraged and inverse exchange-traded fund products.

Citigroup Global Markets, Morgan Stanley, UBS Financial Services and Wells Fargo Advisors were fined more than $7.3 million and ordered to pay $1.8 million in restitution to select customers.

That includes a $2 million fine and $146,431 in restitution from Citigroup; a $1.75 million fine and $604,584 in restitution from Morgan Stanley; a $1.5 million fine and $431,488 in restitution from UBS; and a $2.1 million fine and $641,489 in restitution for Wells Fargo.

FINRA’s sanctions comes after the independent regulatory organization decided that they did not adequately monitor the sales or perform enough due diligence on the ETF products sold from January 2008 to June 2009. Consequently, the firms could not reasonably recommend the investments to the retail customers.

Financial firms selling these kinds of ETF investment products need to understand their complexity, FINRA said in its decision. Leveraged and inverse ETFs hold a different set of risks than traditional ETFs. That is because of reset, leverage and compounding that happens daily that can separate their performance from an underlying benchmark or index, particularly during volatile markets.

Each firm named in FINRA’s decision sold billions of dollars of these ETFs, which were sometimes held by retail investors for an extended amount of time from 2008 to 2009, including periods of market volatility. The investments were unsuitable for certain investors involved who were considered conservative, according to FINRA.

"The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers,” Brad Bennett, executive vice president and chief of enforcement at FINRA, said in a statement. “Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products."

All four firms neither admitted or denied the charges, according to FINRA. In statements provided to On Wall Street, certain firms indicated they have re-evaluated their ETF sales practices since the 2008 to 2009 time frame.

"UBS is pleased to have resolved this FINRA matter," said UBS spokeswoman Karina Byrne. "More than two years ago, UBS developed and implemented enhanced training, suitability and supervisory policies and procedures regarding leveraged, inverse and inverse-leveraged ETFs."

"Morgan Stanley strives for high standards of supervision and is pleased to settle this matter, which pertains to investments sold 3 [to] 4 years ago," the Morgan Stanley spokesperson said. "Since 2009, we substantially limited our sale of these specific types of investments and enhanced our tools to supervise them."

"Wells Fargo Advisors cooperated fully with FINRA throughout this matter and is pleased to have reached this settlement," a Wells Fargo spokesperson said. "The issues underlying the settlement affected certain investors at many firms as non-traditional ETFs became increasingly popular with a wider range of retail investors during a relatively short period of time that coincided with a very volatile period in the market. Wells Fargo Advisors has enhanced its policies and procedures and is confident that it has appropriate supervisory processes and training to meet our regulatory responsibilities and clients' investment needs."

"We are pleased to have this matter resolved," a Citi spokesperson said.