Wells Fargo Investments LLC and Banc of America Investment Services Inc. have been fined and ordered to pay more than $3 million in restitution by the Financial Industry Regulatory Authority (Finra) for selling unsuitable floating bank loan funds to customers, Finra announced Thursday.

Wells Fargo Advisors LLC, the successor of Wells Fargo Investments, was fined $1.25 million and ordered to reimburse 239 customers the $2 million they lost. The firm Merrill Lynch, Pierce, Fenner & Smith Incorporated, the successor to Banc of America Investment Services, has to pay a fine of $900,000 and reimburse approximately $1.1 million in losses to 214 customers.

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 funds are subject to significant credit risks and can also be illiquid.

Finra found that Wells Fargo and Banc of America brokers recommended concentrated purchases of floating-rate bank loan funds to customers who did not have the risk tolerance necessary for this type of investment, Finra says. The customers wanted to preserve principal or had conservative risk tolerances.

Finra also found that the firms failed to train their sales forces to explain the risks and characteristics of the funds to clients and failed to reasonably supervise the sales of floating-rate bank loan funds, Finra says.

Brad Bennett, Finra's vice president and chief of enforcement, said, "As investors continue to look for yield in a low-interest-rate environment, these actions should serve as a reminder that brokers and their firms need to ensure that investment recommendations are consistent with customers' investment objectives and risk tolerances.”

Wells Fargo and Banc of America agreed to the settlement but neither admitted to nor denied the charges.