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FINRA Fines Wells Fargo $500k Over Unsuitable Recommendations

According to FINRA, Wells Fargo is being fined $500,000 for unsuitable recommendations made to customers between August 2005 and July 2012. FINRA says that the brokerage firm recommended to customers to purchase Structured Repackaged Asset-Backed Trust Securities or “STRATS” that resulted in substantial financial losses.

FINRA explained that Wells Fargo failed to educate its brokers and financial advisors about the risks associated with STRATS, including the risk that investors could sustain substantial financial losses by investing in this type of structured product. When brokers do not fully understand the structure or risks of an investment, they cannot make informed recommendations to their customers.

Between August 2005 and July 2012, FINRA says that Wells Fargo sold $12 million in STRATS to its customers. FINRA acknowledged that while Wells Fargo advisors were educated in structured products, they were not specifically educated on STRATS. Since Wells Fargo advisors lacked a reasonable basis for recommending STRATS to investors, their doing so constitutes an unsuitable recommendation.

Wells Fargo consented to FINRA’s findings, agreeing to a censure, fine of $500,000, and financial restitution to customers.

Meyer Wilson represents individuals who suffer financial losses as a result of investment fraud or misconduct. Unsuitable recommendations are a common cause of investment losses. If you experienced substantial losses on your investments, we invite you to contact us today to tell us what happened to you. We will provide you with a free consultation.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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