Recently, the Financial Industry Regulatory Authority (FINRA) fined Wells Fargo broker Scott Wallach $5,000 and suspended him for one month. It also ordered him to pay $873.50, plus interest, in disgorgement of commissions received for allegedly effecting five unauthorized trades in a client account while the client was on vacation. He allegedly sold shares of two securities the client owned and used the proceeds from those sales to purchase a preferred bond in the client’s account. Wallach allegedly sold shares in one security the client owned and used the proceeds to purchase shares in another security. He earned $873.59 in commissions for the five trades. He was also accused of “conducting excessive trading” in an account, unauthorized trading, misrepresentation of commissions, unsuitable investments, and lost opportunity. All of these are against securities laws. Excessive trading, also known as churning, is a particularly egregious violation of securities laws, and is when a broker trades in and out of securities, many times in the same day and of the same security. This can lead to large commissions for the broker, but unnecessary fees for the client.
According to public records with FINRA, Scott Jason Wallach was previously registered with Continental Broker-Dealer Corp in Carle Place, New York from August 1998 until December 1998, Painewebber Inc. in Weehawken, New Jersey from January 1999 until December 1999, Prudential Securities Inc. in New York, New York from December 1999 until July 2003, and Wells Fargo Clearing Services in Paramus, New Jersey from July 2003 until October 2017. He is currently registered with Comprehensive Asset Management and Servicing in Parsippany, New Jersey, and has been since November 2017. He has two customer disputes against him.