Wells Fargo began an investigation into potentially inappropriate referrals and recommendations after the Department of Justice ordered the firm to conduct a review of its sales practices, including allegations that the firm pushed or favored particular products and services in order to earn greater profits or commissions, rather than making sure that the products were appropriate for Wells Fargo customers.
According to its recent SEC filing, Wells Fargo acknowledged the sales practice investigation arising out of settlements with various public entities, including the Office of the Los Angeles City Attorney and a lawsuit filed in the United States District Court for the Northern District of California in which Wells Fargo agreed to pay $142 million to settle charges of consumer fraud and unjust enrichment.
The filing names an additional securities fraud class action alleging misstatements and omissions pertaining to sales practice matters, and claims alleging breach of fiduciary duty, including failure to detect and prevent sales practice violations.
Specifically, Wells Fargo's review will determine "whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company's investment and fiduciary services business."
In October 2017, FINRA ordered Wells Fargo Advisors Financial Network and Wells Fargo Clearing Services to pay $3.4 million in restitution to customers who purchased exchange-traded products that investigators say were unsuitably recommended, including allegations that representatives did not adequately understand ETPs' risks and/or improperly marketed the products as long-term investments when the ETPs were unsuitable for long-term holding.
In December 2017, FINRA barred former Wells Fargo representatives Charles Henry Frieda and Charles Bernard Lynch of the firm's Irvine branch for unsuitably overconcentrating elderly and retirement customer funds in speculative oil and gas securities that ultimately lost money; several scores of related customer complaints alleged unsuitable and unauthorized trading, misrepresentation, churning, and negligence.
The case makes additional reference to the Consumer Financial Protection Bureau and a People of the State of California v. Wells Fargo & Co. stipulated judgment in Los Angeles County Superior Court that required Wells Fargo reimburse customers that had potentially unauthorized accounts opened between 2011 and 2015.
If you have invested with Wells Fargo Advisors or with any broker, financial adviser, or firm that has unsuitably recommended products that were not appropriate given your personal investment objectives or risk tolerance level, and such inappropriate actions including excessive trading and churning has resulted in the incurrence of excessive fees, commissions, or damaging losses, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.