Articles Tagged with Wells Fargo Advisers

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who’ve hidden their outside financial activities. Sometimes, brokers have “side deals” while working at an advisory firm, which they may pitch to existing clients. In a heavily regulated industry, they have to tell their employers and these so-called “outside business activities”, including outside brokerage accounts. When they fail to disclose their other businesses, they can be fired.

FINRA, the federal securities regulator, fined and suspended an ex-Wells Fargo broker “who was terminated by the wirehouse for failing to close three outside brokerage accounts despite being told to do so numerous times by the firm,” according to Without admitting or denying FINRA’s findings, Jacob Popek signed a FINRA Letter of Acceptance, Waiver and Consent on Aug. 31 “in which he consented to the imposition of a $2,500 fine and a three-month suspension from associating with any FINRA member in all capacities.” Wells Fargo declined to comment.

Between November 2018 and April 2020, FINRA stated, “while associated with Wells Fargo, Popek maintained outside brokerage accounts without the firm’s written consent. In October 2018, Popek informed the firm that he maintained three outside brokerage accounts at two other member firms.” Wells Fargo said it “directed Popek to close those accounts. But despite receiving that instruction and multiple subsequent instructions from the firm to close the accounts in 2019, he maintained each of these accounts until July 2019, December 2019, and April 2020, respectively,” according to FINRA.

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with RBC brokers who have oversold energy stocks and other energy-related investments. Although these days energy stocks are among the worst investments to own – the pandemic and oil & gas glut have severely depressed demand — prior to this year brokers had been aggressively pitching petroleum-producing companies. Brokers who aggressively sold energy stocks knew how volatile the energy sector has become, yet filled investors’ portfolios with oil and gas issues. Thousands of investors have legitimate claims against their advisors for overselling unsuitable investments.

Companies that once were opening drilling operations at a breakneck pace are facing bankruptcy as the slump in the industry worsens. Investors who bought individual energy stocks, exchange-traded or mutual funds are feeling the pain.Most recently, investors filed claims against RBC brokers Joseph Ijong Chu and Christopher Lawrence Phillips, who worked at the firm’s Stamford, Connecticut, office. The brokers face investor claims of more than $2 million for reportedly selling “unsuitable investments in oil-producing and industrial metals & materials stocks leading to an over-concentration in those sectors.”

One claim against Chu alleges the broker sold $1.6 million in energy investments to a client between Sept. 18, 2018, through Jan. 20, 2020. The complaint states that the stocks not only declined in value, but were “outside their [customers’] investment objectives.” A separate, $500,000 claim against Chu, filed in July, 2020, alleged he “misrepresented the risk of allocation in energy and material sectors investments and over concentrated the Claimant’s accounts in highly volatile investments.”

You can sue Wells Fargo Advisers for investment losses in Good Harbor Financial US Tactical Core and F Squared Investments AlphaSector Allocator Select. Wells Fargo invested clients into this fund, and the bank was sued in June of 2015 for violations of common law fraud, breach of fiduciary duty, negligence and negligent supervision. An arbitration claim has been filed in the Financial Industry Regulatory Authority (FINRA) forum. In an Order filed by the Securities and Exchange Commission (SEC) F Squared, beginning in September 2008, began receiving a signal indicating when to buy or sell an investment. These signals were based on an algorithm, which F Squared,and its President, Howard Present, used to create a portfolio model to track exchange‐traded funds (ETFs). They named the product “AlphaSector” and it quickly became the firm’s largest source of revenue.

Unfortunately, while marketing AlphaSector, the SEC alleged that F Squared falsely advertised the product. They based it on a seven year track record for investment strategy options, but in reality, the product did not even exist for those seven years. The data derived from it was through backtesting, which is the application of a quantitative model to historical market data to generate a hypothetical performance during a prior period. F Squared touted the product as “not backtested” in their marketing materials, which was clearly false. These false statements were made from September 2008 until September 2013.

Wells Fargo and its brokers, have a fiduciary duty to adequately disclose risks involved when recommending products to be sold to clients. They must performdue diligence on an investment to ensure that it is a sound investment and one that is suitable for the investor.  Often, retail clients portfolios were over-concetrated in F Squared related investments.   If they do not make suitable investments, they can be held responsible for investment losses in those products.

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