January 2020
The Financial Industry Regulatory Authority (FINRA) assessed a fine of $175,000 and censured Wells Fargo Advisors for failing to supervise their financial advisor who churned the account of an 88 year old client.
The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.
In Letter of Acceptance, Waiver and Consent No. 2017053034301 FINRA made the following findings:
- The financial advisor place more than 2,000 trades in the accounts of the senior citizen
- The customer paid over $300,000 in commissions and fees
- Although the customer’s accounts were flagged 40 times due to the excessive trading, the firm did not reasonably address the problem
Ultimately the customer was paid $1 million in restitution and the financial advisor was was discharged.
NASD and FINRA rules require broker dealers like Wells Fargo to establish and maintain a system to supervise the activities of their financial advisors.
Churning
The most basic type of churning comes from excessive trading by a broker to generate commissions. When there are excessive commissions with no noticeable portfolio gains, churning might have occurred.
If you have an account with a brokerage firm that has been excessively traded or unexplained losses, call to learn more.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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TollFree: 877-224-3199
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Texas-512-329-2870