Articles Tagged with Wells Fargo

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who’ve executed unsuitable short-term trading strategies. When a broker takes your money in and out of investment products intended to be held long term, like Unit Investment Trusts or mutual funds, the brokerage firm can be liable for any losses sustained.

FINRA, the U.S. securities industry regulator, recently concluded a sweep of Unit Investment Trust (UIT) sales that resulted in a combined $16.8 million in restitution payments and $6.6 million in fines against six firms, according to Advisorhub.com. UITs are mutual-fund-like vehicles sold by brokers that carry high up-front fees or “loads”.

The regulator reached a settlement with two Wells Fargo Advisors broker-dealers “that agreed to pay $3.1 million in fines and restitution over failure to supervise improper short-term trading of UITs. The sanctions, which were levied against the firm’s core Wells Fargo Clearing Services broker-dealer and Wells’ independent Financial Network unit, included almost $2.5 million in restitution and $650,000 in fines.” The FINRA sweep previously “also hit Merrill Lynch, which paid the lion’s share of the penalties with $11.65 million in fines and restitution, as well as Stifel Nicolaus & Co., Cambridge Investment Research, and Oppenheimer & Co.”

Stoltmann Law Offices, P.C. is a Chicago-based investor rights and securities law firm that has represented investors nationwide for almost 17 years. Investors who are defrauded by financial advisors have rights and can pursue arbitration against firms like Wells Fargo in an attempt to recover investment losses.  On November 2, 2021, FINRA, which is the federal regulator of broker/dealers like Wells Fargo Advisors and James Seijas, issued an “Acceptance, Waiver, and Consent” (AWC) in which James Seijas consented to a life-time ban from the securities industry. The reason for the ban was a result of Seijas consciously failing to respond to FINRA’s requests for information authorized by FINRA Rule 8210. If an advisor does not comply or cooperate with FINRA’s investigation, then the regulator will seek to bar the advisor for life. This is a stiff sentence for non-compliance but is not uncommon when brokers facing seriously allegations by customers or regulators are asked to comply with information requests or sit for an interview on the record.

The AWC was prompted by a filing made by Wells Fargo on Form U-5, which is a securities industry form filed with regulators when a broker’s registered ends with a firm like Wells Fargo.  The U-5 Wells Fargo filed identified the reason for him no longer being registered with the firm and was enough to trigger an investigation by FINRA. The AWC does not say what that Form says, and even more peculiarly, his FINRA BrokerCheck Report does not say anything about him being terminated for cause, which is a required disclosure. What his BrokeCheck Report does reveal, however, is the existence of two pending customer complaints. Both complaints have to do with the recommendation to invest in a fraudulent hedge fund or an investment which was part of a Ponzi scheme.

According to AdvisorHub, Seijas is a defendant in a pending claim which alleges he was involved in a $30 million-plus crypto-currency investment scheme. This claim is pending in Hillsborough County, Florida, against Seijas and several other defendants, including Wells Fargo. The prevalence and sudden popularity of cryptocurrency creates a perfect storm for scammers and unsuspecting victims. There is a lot of “FOMO” – fear of missing out – when it comes to crypto-currency. Investors are eager to dip their toes into the pool but many are reluctant to dive in by opening accounts with crypto-exchanges like Coinbase. Instead, investors get involved with purported “hedge” funds that allegedly invest in crypto, like those that invested with Seijas.

Scott Wayne Reed (“Agent Reed”), of Scottsdale, Arizona, has been engaging in various misconduct in customer accounts for years now. Most recently, earlier this year a Wells Fargo customer alleged that Agent Reed solicited him to invest in “an investment opportunity in a company not offered by Wells Fargo Advisors”, Reed broker-dealer at the time. Upon information and belief, Reed tried to solicit several customers to invest in outside business activities sponsored by Hollywood producers. This “selling away” activity led to Reed’s departure from Wells Fargo on April 7, 2020.

Several of Agent Reed’s customers have complained that he sold them unsuitable investments in private placements, oil and gas investments, hedge funds, and mutual funds and over-concentrated their accounts in private placements. In 2017, elderly clients of Reed filed a complaint against Reed’s previous brokerage firms, Accelerated Capital Group (“ACG”) which is now out of business, and Coastal Equities, and later adding him personally to the complaint, for selling them several unsuitable investments. Included in these investments were various Staffing 360 issuances, Aeon Multi-Opportunity Fund, which became Kadmon, and Aequitas, which ended up being a Ponzi scheme. The clients lost their entire investment in Aequitas. They lost between 92% to 99% of their investments in Staffing 360 and lost 70% of their investments in Aeon/Kadmon. Reed sold these investments to his clients even after there were red flags that these companies were completely failing and drowning in debt.

Agent Reed has bounced around several brokerage firms, and has also worked as a registered investment advisor. From 1999-2001, he was registered at Ameritrade. His longest tenure was at Fidelity from 2001 through July 2010. He had brief stints at Strategic Advisors, Inc. and Meridian United Capital before joining Accelerated Capital Group from 2010 through 2015. Agent Reed was registered with Coastal Equities for only five months then joined Wells Fargo from April 2016 through April 2020. While his CRD Report states that he “voluntarily resigned” from Wells Fargo, the explanation details that his resignation came while he was under investigation for selling away. He has been registered with First Financial Equity Corporation since April 2020. Reed was also a dually registered RIA with Gentry Wealth Management from July 2010 through April 2016, which became Ashton Thomas Financial in 2015. According to his FINRA BrokerCheck Report, Mr. Reed operates as “Reed Private Wealth”.

On December 27, 2018, John G. Schmidt was charged in a 128 count indictment by the Montgomery County, Ohio Prosecuting Attorney. According to Investment News, the Prosecutor alleges that Schmidt, while employed a financial advisor for Wells Fargo Advisors, stole money from clients while operating a Ponzi scheme. The Prosecutor further alleges that Schmidt created fictitious account statements in order to hide his fraud from his investor clients.

According to Schmidt’s publicly available FINRA BrokerCheck Report, he was employed with Wells Fargo Advisors Financial from 2006 to October 24, 2017 when he was terminated for cause “after allegations of unauthorized money movement between clients, and after the Firm was notified of an allegation of the existence of inaccurate statements which appear not to have been generated or approved by the Firm.” Only days after Schmidt was fired by Wells Fargo, the customer complaints began rolling in alleging he had stolen money. Some of those cases have been settled but a few are still pending.  On September 25, 2018, the Securities and Exchange Commission filed a civil complaint against Schmidt outlining the details of this Ponzi scheme.

Schmidt’s Ponzi scheme is why the SEC and FINRA have mandated for generations now that brokerage firms adequately supervise their brokers.  In 1989 the SEC clearly outlined a brokerage firm’s supervisory responsibilities:

AdobeStock_66548440-1-300x169Gary Gray, a former Las Vegas-based Wells Fargo broker was suspended from the industry for three months by the Financial Industry Regulatory Authority (FINRA). He was also fined $10,000. Allegedly, Gray exercised discretion in effecting 236 trades in accounts maintained by eight of his member firm’s clients without obtaining prior written authorization from the clients to exercise discretion in their accounts and without the firm having approved any of the accounts for discretionary trading. He also allegedly falsely certified in a firm Registered Asssociation Compliance Questionnaire that he did not have any accounts in which he exercised trading discretion, including time and price discretion. He also caused his firm to maintain inaccurate books and records because he allegedly marked 12 order tickets for clients as unsolicited, when, in fact, they were solicited. These are all against securities laws and Wells Fargo internal firm rules.
If you or someone you know lost money with Gary Gray, you may be able to recover those losses in the FINRA arbitration forum on a contingency fee basis, which means we only make money if you recover yours. Attorneys are standing by to take your call for free. There is no obligation. Wells Fargo may be liable for losses because the firm has a duty to reasonably supervise its employees while they are registered there, so as not to let them transgress. We have brought claims against Wells Fargo because of the violations of Peter Malis, Shelley Freeman, and others.
Gary Raymond Gray was previously registered with Bateman Eichler, Hill Richards from May 1987 until October 1988, Painewebber in Weehawken, New Jersey from October 1988 until January 2000, Prudential Securities in New York, New York from January 2000 until July 2003 and Wells Fargo in Las Vegas, Nevada from July 2003 until June 2017. He has one customer dispute against him, has been suspended, and is not currently registered as a broker. This is according to his online, FINRA BrokerCheck report. Please call today.

AdobeStock_82110313-1-300x125According to a recent Financial Planning article, Richard White, a former Wells Fargo representative was expelled from the industry for depositing his gambling winnings in a way the deliberately skirted federal reporting requirements under the Bank Secrecy Act. The Financial Industry Regulatory Authority (FINRA) accused White of unlawfully “structuring” a total of $77,560 that he won on gambling trips to Las Vegas by depositing the cash into his bank accounts in amounts just below $10,000 reporting threshold. Under the Act, broker-dealers are required to file currency transaction reports for all transactions exceeding $10,000, the hearing panel explained in its decision. Several times the broker deposited just under that amount and made multiple deposits below $10,000 over the course of several days or weeks. FINRA also accused him of concealing what he was doing by splitting deposits aggregating more than $10,000 into smaller deposits at two different financial institutions so that neither would recognize that the report should have been made. This is against securities laws and internal firm rules.
According to FINRA records, Mr. White was previously registered with First Union Capital Markets in Charlotte, North Carolina from December 1998 until October 1999, First Union Securities in St. Louis, Missouri from October 1999 until August 2000, Wachovia Securities in St. Louis from March 2002 until July 2003, Wells Fargo in Charlotte from October 2009 until July 2010 and Wells Fargo in Charlotte from July 2003 until April 2015. He has one regulatory matter pending against him and is not currently registered as a broker.

AdobeStock_112465076-1-300x164According to a recent Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA), Marcus Parker was permanently barred from the industry. Parker, a former broker with Wells Fargo, failed to respond to a FINRA investigation against him. This results in a permanent bar from the industry. According to his online, public FINRA BrokerCheck report, Parker was previously registered with Dean Witter Reynolds, Thomson McKinnon Securities, Prudential Securities, Painewebber Inc., Salomon Smith Barney, Merrill Lynch and Wells Fargo in Santa Fe, Mexico from September 2008 until December 2017. He has one customer dispute against him, alleging suitability. He has been permanently barred from the industry. You may be able to bring a claim against Wells Fargo in the FINRA arbitration forum on a contingency fee basis, which means we only make money if you recover yours. The firm had a duty to reasonably supervise Parker while he was employed there.

AdobeStock_91053286-1-300x194Wells Fargo is in hot water again, this time with the state of California. Its insurance commissioner is seeking to suspend or revoke Wells Fargo’s insurance licenses for allegedly opening 1,500 insurance policies without customer’s knowledge or permission. Most of them for renters insurance and were created online using bank accounts that belonged to the customers. The customers were not aware of this. In some cases, the customers were told they were getting an insurance quote, but the employees submitted applications to buy insurance anyway. They did not have permission from the customers to do so. Their bank accounts were then auto-debited to pay for the policy premiums. Earlier this year, in October, the bank was ordered to refund $80 million to customers who were wrongly charged for auto insurance from 2012 until 2017. Last year, the bank was fined $185 million in fees that customers were charged in a scam that employees operated by opening 1.5 million unauthorized bank accounts and applying for 565,000 unauthorized credit cards in customer’s names. The customers were unaware of this activity. The bank was forced to reimburse $2.6 million in fees that customers were charged. The bank also fired 5,300 employees as a result of it.

AdobeStock_78306447-1-300x199A Financial Industry Regulatory Authority (FINRA) arbitration panel awarded $462,000 to former clients of Charles Fackrell, a former LPL broker serving prison time currently. Fackrell pleaded guilty to a $1.4 million ponzi scheme, and has many pending and future claims against the firm because of his misconduct. The bank may face more than 50 clients over charges against Fackrell. Total penalties, restitution, arbitration awards and settlements relating to the broker have reached $1.9 million. Fackrell will pay restitution of $819,918 to the victims, but LPL may face having to pay more than $1 million. He allegedly stole more than $700,000 of his clients’ $1.4 million from 2012 until 2014, telling them that he would invest their money in gold and other precious metals, but, instead spent most of the money on personal items. He was sentenced to five years in prison in December 2016 after he pleaded guilty to securities fraud, and after he spent almost half the investments he controlled between that time period. He allegedly suffers from bipolar disorder and post traumatic stress disorders and major depressive disorder. State regulators in North Carolina and Washington have sanctioned LPL over its supervision of Fackrell. Former clients to date have won more than $276,000 from LPL in arbitration.
Mr. Fackrell was previously registered with Morgan Stanley in Winston-Salem, North Carolina from August 2007 until February 2008, SunTrust Investment Services in Yadkinville, North Carolina from July 2008 until December 2009, Wells Fargo in High Point, North Carolina from December 2009 until June 2010 and LPL in Yadkinville from June 2010 until December 2014. He has 10 customer disputes against him, three of which are pending, alleging unsuitability and poor performance of investments, misrepresentation, breach of fiduciary duties, failure to supervise, violation of the North Carolina Securities Act, breach of contract, and fraud, among other things. He has two criminal charges against him, both of which are pending. According to his online, public FINRA BrokerCheck report, he has been permanently barred from the industry.

AdobeStock_49363801-1-300x200Attorneys at Stoltmann Law Offices are investigating sexual harassment claims against brokerage firms such as Wells Fargo. A former Wells Fargo broker claimed sexual harassment against the firm in a lawsuit that points the finger at colleagues and manager. Laurie A. McNally filed a complaint in federal court in the eastern district of Pennsylvania, alleging that Wells Fargo allowed her to be subject to lewd comments from colleagues and managers, lower pay than comparable male producers, and retaliation for reporting fraudulent practices at three Philadelphia-area branches where she worked. She also alleged that she was given far less administrative support than her male counterparts. She alleged that she was told by a regional manager, “we only hire hot women and you qualify,” and that other male employees told her she should be wearing thigh-high stockings because it was “thigh-high Thursday,” to “lift up her shirt” for one employee, and suggested they have carnal relations “one time before I die of cancer.” It also asserts that the branch manager, David Lucy, suggested that she “had to do something to get something.”

In a separate occurrence, a former Wells Fargo broker Jessica Nibert, stated that her supervisor, Robert Courtwright began making sexual advances toward her almost immediately after she was hired by the firm. She alleged that Courtwright questioned whether she would like to make more money outside the firm by cooking him dinner in the nude. He also allegedly and intentionally put her cubicle next to his so he could see her “ass and legs all day.” He told her she had a “nice butt,” and made a pass at her at her infant’s funeral, telling her she looked “hot,” and that he couldn’t tell she had “just had a baby.” He then allegedly called her at odd hours at home to find out whether she was in the shower because he “loved thinking of her naked.” Nibert claims it led to the deterioration of her marriage because she was hesitant to go to human resources, thinking she would be terminated if she took action against him.

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