One of the largest banking institutions in the U.S., Wells Fargo offers a wide range of financial services, including investment products through its subsidiaries: Wells Fargo Investments, LLC and the recently acquired Wachovia Securities, now known as Wells Fargo Advisors.
A securities brokerage firm licensed by FINRA, Wells Fargo has a legal duty to supervise its brokers and its brokers’ recommendations to clients to ensure compliance with and prevent violations of the rules of the security industry. When an individual broker is negligent or acts in an unlawful manner against the interests of the client and that client suffers damages as a result of such wrongdoing, the firm may be held liable for the investor’s losses.
Wachovia Securities – Prudential Securities
Wachovia Securities was the securities subsidiary of Wachovia Corporation. In 2003, Wachovia Securities merged with Prudential Securities, making it the third largest full-service brokerage firm in the U.S. During the recent U.S. subprime mortgage crisis, Wachovia found itself struggling and was acquired by Wells Fargo in 2008. In 2009, Wachovia Securities became Wells Fargo Advisors.
AG Edwards & Sons
Founded in 1887 in St. Louis, Missouri, AG Edwards was one of the first brokerage firms to be publicly traded beginning in the 1970s. As of 2007, AG Edwards & Sons, Inc. operated as a subsidiary of Wachovia Securities, LLC. Following the merger, Wachovia moved the world headquarters of combined retail brokerage, Wachovia Securities, from Richmond, VA to AG Edwards’ previous headquarters in St. Louis. Subsequently, Wachovia eliminated the AG Edwards brand in favor of Wachovia Securities. Wachovia Corporation was later purchased by Wells Fargo.
Wells Fargo Investment Fraud
In recent years, Wells Fargo Advisors have come under scrutiny for various claims of investment fraud and misconduct. In 2011, FINRA fined Wells Fargo Advisors $1 million for delays in delivering prospectuses as well as delayed reporting required information to brokers. Federal securities laws require brokerage firms to deliver prospectuses within three business days, which Wells Fargo failed to do in the case of at least 900,000 customers. Some received theirs up to 153 days late.
In 2012, Wells Fargo was fined $2 million by FINRA for selling unsuitable reverse convertibles primarily to the elderly. One of the primary brokers alleged in this case was Alfred Chi Chen. In at least 25 percent of Chen’s client accounts with reverse convertible holdings, 90 percent of the clients’ assets were in risky securities. In December of that year, a federal indictment was brought in U.S. District Court that charged nine defendants from North Carolina in an $11 million insider trading conspiracy. The lead defendant, John Femenia, was a Wells Fargo investment banker.
In June 2013, FINRA announced that it ordered Wells Fargo to reimburse customers more than $3 million due to unsuitable sales of floating-rate bank loans. The fine amounted to $1.25 million and the reimbursements to more than 239 customers totaled approximately $2 million in losses. Floating-rate bank loan funds can be illiquid and pose significant credit risks.
Recover Losses Against Wells Fargo
Meyer Wilson has the knowledge and resources necessary to successfully represent investors in their claims against securities brokerage firms such as Wells Fargo. We represent clients with investor claims in federal and state courts, and in arbitration through The Financial Industry Regulatory Authority (FINRA), the American Arbitration Association (AAA) and private arbitration. We also represent international clients with claims against brokerage firms in the United States through FINRA. To determine whether you have a case against Wells Fargo for your losses, call us toll-free or submit our online contact form to request a free case evaluation.